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Types of Income

Income falls into several categories–especially for the IRS. You may be asked about your various incomes if you apply for a larger loan, a credit card, and of course on your tax form. Here’s a quick round-up of the major groups of income:

Wages & salary: What you get paid for work you do.



Business income: The net income from your business.

Rental income: The proceeds if you rent a property, or a room in your home.

Capital gains: For example: If you buy a house for $140,000, and then sell it for $160,000, that $20,000 you made is capital gains. It’s taxed differently than regular income. You can, however, deduct the cost of any property improvements you made–so keep those receipts!

From government programs: Social Security, disability, federal grants and scholarships, unemployment, government and military pensions, government health care credits.

Certain tax issues: Earned Income Tax Credit, tax refund.

From investments: Interest earned on accounts, dividends from stock investments, annuities, from your 401k after you start drawing from it, selling stock options, stock that is given to you.

Other miscellaneous sources: Clergy earnings, gambling income,bartering income, some categories of cancelled debt, and alimony.

Child support is NOT taxable, or tax deductible, though it is income.

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