1. Explain why your net pay is different from your gross pay. Include some common paycheck withholdings.
2Mr. Faulk makes $120,000 annually. $100,000 comes from his salary, while the other $20,000 comes from stocks. Label Mr. Faulk's earned income and his unearned income.

please help thanks lots

Question

1. Explain why your net pay is different from your gross pay. Include some common paycheck withholdings.
2Mr. Faulk makes $120,000 annually. $100,000 comes from his salary, while the other $20,000 comes from stocks. Label Mr. Faulk's earned income and his unearned income.

please help thanks lots

anonymous · Answer

These are different types of income. Whereas a salary is "normal income", gains from stocks are classified as "capital gains" and might be taxed at different rate. Although, in many areas these types of income are taxed at the same rate. Besides, until the stocks are sold, deferred tax obligation might arise.