An examiner may require the immediate production of records. Make sure your companyâs data storage and networking infrastructure is up to date. Prepare for unannounced compliance audit by obtaining a copy of an inspection checklist from a specific regulatory or governing agency. Compliance is a multifaceted and complex matter.
Federal taxable income is the adjusted gross income less the deduction for personal exemptions and itemized deductions, which include items such as home mortgage interest, property taxes and charitable donations. Taxable income is the figure used to determine the actual taxes due.
The following two equations summarize how income is treated on your tax return. You start with your total, or gross, income, and after adjustments, you get your adjusted gross income. Next, subtract exemptions and deductions in order to arrive at your taxable income. (This serves as a good reminder that not all of our income is actually taxed.) Adjusted Gross Income (AGI) = Gross income - Adjustments. Taxable Income = Adjusted Gross Income (AGI) - Exemptions - Deductions.