Do we pay taxes on earned income or income received?

ANSWER

The BIDaWIZ Team's Answer:

Neither: you pay income taxes on income; net of all applicable

tax deductions; i. e. net taxable income. If you are a "cash basis"

taxpayer, you report income when it is received; not when it is earned.

Conversely, if you are an "accrual basis" taxpayer, you report the income

when it is earned; not when it is received.