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Federal Taxable Income

What is Federal taxable income?

Federal Income Tax or Federal Taxable Income is income that the Internal Revenue Service, also known as the IRS, levies on the amount earned by individuals, trusts, corporations, and any other legal entity. Federal income taxes are applied to all forms of income or earnings that a taxpayer has that are taxable. These earnings include, but are not limited to, capital gains and employment earnings. Listed below are a few questions pertaining to the Federal Taxable Income answered by the Experts.

What are the reasons why a person’s State Taxable Income could become greater than a person’s federal Taxable Income?

There could be many reasons why a person’s Federal Income could be lower than their State Taxable Income. These reasons could be because of personal exemptions which include federal amounts of $3,300/each and state amounts of $1,500/each. In most cases, this only applies to children. Another reason could be itemized deductions that include the fact that state income tax is deductable for federal purposes but not for state. Yet another reason could be that interest income from municipal bonds is taxable at the state level and not the federal level.

In the State of Illinois, with regard to a family trust, would there be capital gains tax in the amount of 5% when the value of the trust is $500,000?

In the State of Illinois, every trust and estate that is earning or receiving income is subject to taxes which are figured by multiplying the net income by a flat rate. In most cases, the State of Illinois bases most of their taxes on the Federal Income Tax Code. After January 2011, the tax rate has become 5% for a trust or estate and a 1.5% replacement tax also has to be paid by the trust.

I was unemployed and collected unemployment devoid of any tax. My wife was also unemployed but had a few dollars of taxable interest. Our combined income amounted to less than the standard deduction for a joint return. However, in the “Additions to Federal Taxable Income” section on Form D-400, it says that I need to enter $10,900 as my standard deduction. Shouldn’t it be $17,900 for a joint return? Line 35 also mentions an extra $3,000 that I need to add which results in a taxable income that I don’t have. What can I do?

The form you are using is the correct one and based on that, you have to enter a figure of $10,900 as your federal standard deduction if you are filing a joint return as a married couple. In most cases, the IRS also allows the individual and their spouse a $3,500 personal exemption allowance each. The total of the personal allowances and the standard deduction is what amounts to $17,900 but out of this only $10,900 is the actual standard deduction. With regard to line 35, you should be able to leave this blank unless you have a combined income of $100,000.The following link will help to fill out the form and page ten will explain line 35 in detail: http://www.dor.state.nc.us/downloads/D401.pdf

If a person worked in Iraq the previous year and the person’s W-2 states that their federal income was $75,000 and their state income was $158,000, does it indicate that there is a mistake in the figures? Shouldn’t they be the same?

When it comes to a person’s W-2, the Taxable Federal Income would be the amount shown in Box 1. The person may have also made several contributions that would not be included in this amount. If these contributions were tax deferred, they would be deducted from the Box 1 amount. Since an individual’s pre-tax status is only for federal tax purposes and not for state tax, the figure shown for State Taxable Income will be higher than the Federal Taxable Income. However, in each case it would be better to check with the person’s employer and ask them for a detailed list of why the amounts are different.

Federal Taxable Income is the amount of income that a person makes that the Federal Government levies taxes upon. When a person is dealing with their taxes, they may run into questions regarding why federal income amounts differ from state income amounts, what is the way they need to figure out their Federal Taxable Income and so on. At times like this, put your questions to Tax Professionals who can offer insights and information at a reasonable cost to help with your specific case.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
Satisfied Customers: 572
Experience:  10 years experience
16356563
Type Your Tax Question Here...
characters left:
7 Tax Professionals are Online Now

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    Rate the answer you receive.

Tax Professionals are online & ready to help you now

Wallstreet Esq.
Tax Attorney
Satisfied Customers: 570
10 years experience
Wendy Reed
Enrolled Agent
Satisfied Customers: 3052
15+ years tax preparation and tax advice.
Mark D
Enrolled Agent
Satisfied Customers: 985
MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Recent Federal Taxable Income Questions

  • Im a full time resident of Nevada and I run a successful software

    I'm a full time resident of Nevada and I run a successful software business from my home here that generates a yearly income of over $500,000 for me. That's the main reason I live in Nevada where there's no state income tax and on that kind of income, I save a lot. If I bought a second home in Colorado and rented it out, I assume I would have to file a Colorado state tax return? If so, then would Colorado tax me on my entire income for the year or just on the rental income from the property in Colorado? If they taxed me on my entire income then it's not going to be worth renting it out.
  • I am a US Citizen living in Colorado and presently unemployed.

    I am a US Citizen living in Colorado and presently unemployed. I have been offered a job in Sierra Leone in Africa. I will be working for a UK company on contract for 6 months and they will withhold 30% of my income to pay taxes in Sierra Leone. I will maintain my residence here and return approximatley every 6 weeks for 3 weeks R&R.
    Annual Basic Salary $165,000
    Annual Location Alllowance $58,928
    My wife will remain in Colorado and has a part time job. Her W2 for 2012 was $13,300.
    QUESTIONS:
    1) Will I have to pay State and Federal Tax?
    2) What documentation will I require for my 2013 tax return as I will not get a W2?
    3) If I do have to pay US taxes, what progressive (monthly or quarterly) payments be required?
    4) Which IRS documents support the responses as I would like to get a copy for my records?
    Thank you for your help.
    GorXXXXX XXXXX
  • ISSUE: Can a 1099-R issued in March of 2012, be reported in

    ISSUE: Can a 1099-R issued in March of 2012, be reported in 2011 Federal taxable income to meet taxpayers intention to withdraw the initial required minimum distribution (RMD) in a 401-K plan(s) by April 30th in the calendar year following the taxpayer reaching age 70 ½?
    Supporting facts:
    >1099-R issued by ML to taxpayer in March of 2012 for $44,509
    >Taxpayer declared the RMD of 36,790 due in 2011 Federal taxable income, with 2011 being the calendar year he reached age 70 ½, with the understanding the actual withdrawal could be done as late as 4-30-2012.
    >The $7719 balance of the 1099-R issued by ML in March of 2012 was applied toward the 2012 RMD of his 401-K plan(s)
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