Tax time can be confusing, but understanding taxable income is key. It includes salary, bonuses, and even lottery winnings — all reported to the IRS. Calculating taxable income involves deductions from adjusted gross income to determine your tax liability. Employee compensation, investment income, fringe benefits, and miscellaneous sources are all taxable.

To reduce taxable income, consider contributing to a traditional 401(k) or utilizing health savings accounts (HSAs) and flexible spending accounts (FSAs) to cover medical expenses. Tax deductions for student loan interest and federal loan forgiveness can also lower taxable income. Seek professional advice for complex tax situations.

Remember, not all income is taxable — exceptions include charitable contributions and certain capital gains. Different rules apply to alimony, retirement accounts, and state taxes. Use strategies like retirement contributions, itemizing deductions, and tax credits to lower your tax bill and engage in better financial planning.

Read more at Yahoo Finance: What is taxable income, and how can you reduce it?