Although some income isn't taxable, many types of income are. Congress decides what kinds of income will be taxable.
What counts as income subject to tax?
In general, all income is taxable unless the law specifically exempts it. Sometimes, taxpayers receive income without formal documentation. That doesn't matter—if it's taxable, you'll need to report it. Income that's taxable includes:
What counts as income that is not taxed?
I have income subject to tax. What do I need to do?
You'll need to report your income on your tax return (also known as IRS Form 1040). This form will help you calculate the taxes that you owe on your income. Your April tax professional will take care of this form for you. You'll just need to pay whatever taxes you owe.
Why do I have to pay taxes on my income?
Income taxes are a source of revenue for governments. They're used to fund public services, maintain important infrastructure, pay government debts, and provide goods for citizens.