What is the difference between Adjustable gross income and taxable income?

Answer 1

Taxable Income is your adjusted gross income minus your exemptions and either itemized or the standard deduction.

ANSWER: The Internal Revenue Code defines taxable income as: Gross income minus deductions allowed (other than the standard deduction). In the case of the individual who does not elect to itemize his deductions for the taxable year... the term taxable income means adjusted gross income, minus the standard deduction and the deductions for personal exemptions provided in section 151. The problem with the definition of taxable income given by the Internal Revenue Code is that it leaves more questions than it answers and by defining taxable income as is one must now find the definitions for gross income, adjusted gross income and taxable year. But even before you wade through the Code doing due diligence in learning and knowing the law, there is a fundamental question that remains unanswered by the definition of taxable income and that question is, what exactly is being taxed? What is the subject of the tax? Is it a direct tax or an indirect tax? Is the subject of the tax people, property or activities and where specifically in the Code has a tax been laid upon that subject.

Section 1 of Title 26 of the Unites States Code imposes a tax upon the taxable income of...it then lists certain individuals mostly through marital status to imply that everybody in one way or another is liable to this tax. Implication does not make one liable and if you want to see the Code clearly make someone liable I would direct you to sections 5005, and 5703. Once you read these sections you will see that people involved in a very specific taxed activity have clearly been made liable for an income tax. Why is the Code so clear in these sections and so ambiguous in the rest? This is not your problem or my problem. Our problem is that we can not have anything even remotely related to an intelligent conversation about this "Personal Income Tax Law" until we can know the subject of the tax.

Answer 2

Gross income is the sum of income from all of the revenue generating activities. This does not include any deductions. Taxable income is the gross income and all of the deductions. Taxable income is always lower than gross income because all of the deductions are included.