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    Components of Taxable Income

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    What are the differences between the following components of taxable income? Provide at least one example of each.

    Deductions for AGI and deductions from AGI
    Gross income and AGI
    AGI and taxable income
    Tax deduction and tax credit
    Personal exemption and dependency exemption

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    Deductions for AGI and deductions from AGI : Deductions for adjusted gross income (AGI) are generally deductions from the taxpayer's gross income which relate to costs of generating income or of a taxpayer's trade or business (including the trade or business of being an employee). Some deductions for AGI include the deduction for one-half of self employment tax, the deduction for contributions to a traditional individual retirement arrangement, and the deduction for the costs of moving related to the taxpayer's trade or business (including his or her employment). Deductions from AGI generally relate personally to the ...

    Solution Summary

    This solution discusses the components of taxable income.