Calculating your taxable income

It's important not to confuse your taxable income with your gross income or adjusted gross income (AGI). 

There is no line item on a tax return called gross income, but the term is commonly used to refer to your total income before any deductions or adjustments.

You can find your AGI on line 11 of your 2023 Form 1040 or Form 1040-SR. It's calculated by taking your total income from line 9 and making adjustments based on the results from Schedule 1 and any other applicable adjustments. The total income on line 9 already includes the additional income items from Part I: Additional Income of Schedule 1. For example, these items may include:

• Taxable refunds, credits, or offsets of state and local income taxes
• Business income or loss
• Unemployment compensation

The adjustments you need to make to get from line 9 to line 11 are found in Part II: Adjustments to Income of Schedule 1. 

For example, some adjustments may include:

• Educator expenses
• Self-employed health insurance deduction
• IRA deduction

Taxable income comes even later in the tax preparation process and is located on line 15 of your 2023 Form 1040 or Form 1040-SR. The line that your taxable income can be found on may change from year to year, so ensure that you're using the correct line if you're filing a tax return from a different year. 

Taxable income is calculated by starting with your adjusted gross income and then subtracting your standard or itemized deductions and any qualified business income deduction you might have.

Finding your filing status

You'll find the place to indicate your filing status at the top of Form 1040 or Form 1040-SR. Your filing status is determined on December 31 of the applicable tax year. If you got married on December 30 of the tax year, you could file either married filing jointly or married filing separately. But you can't file as single even though you were single for most of the year.

How to use a tax table

Using the IRS's tax tables is straightforward once you know your taxable income and filing status.

The tax tables display the single, married filing jointly, married filing separately, and head of household filing status options. If you're a qualifying widow or widower, you should use the married filing jointly column on the table.

First, find the line that corresponds to your taxable income for the year. Once you find that, look to the right and use the number in the column associated with your filing status to input the tax amount on line 16 of Form 1040 or Form 1040-SR.

Tax tables can be found in several official IRS documents. Each set of document may have the tax tables on different pages. 

The below example uses the tax tables found in the 2023 Form 1040 and 1040-SR Tax and Earned Income Credit Tables publication. Based on these tables, a single person with a taxable income of $35,027 would turn to page 7 of this document. They would then find the line corresponding to their taxable income, which is a taxable income of at least $35,000 but not greater than $35,050. Next, they'd look to the right on this line to the number in the single-filing status column. This number would then be input on line 16 of Form 1040 or Form 1040-SR as the tax amount.

Keep in mind that this is not your final tax owed. Further down on the tax return form you will continue making other adjustments for tax credits, federal income tax withheld, and more.

Properly calculating your taxable income and tax amounts is important. 

he IRS will double-check your math for errors. If you end up owing more tax than you paid, you may be subject to interest and penalties on the unpaid amounts. If you calculate that you paid too much during the year you are eligible for a refund of the overpaid amount.