Taxable income is the amount of income a
taxpayer uses to calculate
tax liability.
Another way of phrasing it would be to say that taxable income is the portion of
a taxpayer's income that is subject to taxation. Not all of a pilot or
flight attendant's gross
income is taxed. Various
above-the-line deductions and
below-the-line deductions affect gross income, thus making taxable income
lower. In the case of pilots and flight attendants,
employee business expenses for airline
crewmembers are helpful in lowering taxable income and tax liability.
Taxable income is the income amount used in
determining tax liability
via tax rate tables for a given tax bracket. If taxable income is too
low compared to gross income (meaning the taxpayer had many write-offs and
itemized
deductions), it is possible that the taxpayer could be subject to the
AMT
(Alternative Minimum Tax), which affects higher income individuals with many
deductions.
Unless the AMT applies, taxable income is
related to adjusted gross income as follows:
Adjusted Gross
Income - Below-the-Line Deductions = Taxable Income
