Gross Income
Gross Income refers to the total income earned by an individual or business before any deductions, taxes, or expenses are taken out. It includes wages, salaries, bonuses, rental income, investment income, and any other income streams.
Examples:
- A salaried employee earning $60,000 annually has a gross income of $60,000.
- A freelance graphic designer who earns $5,000 in a month has a gross income of $60,000 if they work for 12 months without interruption.
- A landlord receiving $1,200 monthly in rent from a property has a gross income of $14,400 per year from that rental.
- An individual earning $1,000 in dividends from investments is considered to have a gross income of $1,000 from those investments.
Cases:
- In Tax Court Case 1, a taxpayer reported gross income including wages, dividends, and Capital gains. The IRS allowed these to be counted as gross income.
- In Business Case 2, a small business owner calculated gross income by summing all sales before deducting costs, leading to an accurate financial overview for potential investors.