Income.

We continue with form 1040. If you look at the illustration you will see several lines, each one numbered. Well, income is on lines 1 to 9.

Line 1 is the most common, which is the information from the W2 form; a form that everyone who works for salary receives at the end of the year. However, although it is the most used, there are other types of earned income to declare.

As you can see from 2 to 8, other income that may be taxable is noted (REMEMBER: Taxable means that you have to pay taxes). They may well be:

• 2- The interest of the payment of taxes (interest received for having paid taxes in advance)
  
• 3- Dividends received from your investments. (A quick note: Depending on the type of DIVIDENDS, a different percentage of taxes is paid)
  
• 4- The amount of money you have withdrawn from your IRA (Independent Retirement Account).
  
• 5- The money you receive from pensions or annuities. (An example: The Culinary Fund Pension)
  
• 6- What you received from social security. Yes, SURPRISE! Some of the money you receive from Social Security may be considered taxable, depending on how much money you earn from other sources.

• 7- Here the profits generated from your investments are recorded. This can be for sales of your shares and bonds or for interest on these. (NOTE: Not the dividends. Those go in box 3).

• 8- Any other type of income that is also taxable. These are counted in another form called SCHEDULE 1 where the total of that form is written in this box. That “other income” is and is not limited to money received from state taxes, alimony money, profits from businesses you own, profits from houses you rent or sell, money earned gambling in casinos, money you receive from unemployment, and any other money you EARNED regardless of activity.

On line 9, you add all the numbers and that is the TOTAL OF YOUR INCOME.

Now, that does not mean that is what you have to pay taxes on. There are certain adjustments which we will talk about next time.