A person may choose to itemize his or her deductions or take the standard deduction that is provided by the federal or state government. Tax rates are mathematical tables that determine the amount of tax that an individual owes. Tax rates are based on income. The higher a person's income, the higher the tax rate. Presently, the highest taxable rate for income is 39.6 percent of income.
Income is defined as the realization of gain.
This sounds complicated, but it's really not. Anytime you receive money, be it a paycheck or the selling of your house, you have realized a gain. Realizing gain is a key requirement in tax law. Gambling winnings are fully taxable and must be reported on your tax return. When you complete your list, you total the amount spent and compare the total with your standard deduction.