What Is Gross Income?
Gross income is the amount of money that you earn before any taxes or other deductions are taken out of your payment.
This income amount is what impacts the loans you can take, how much you can borrow for a home and, most importantly it's used to determine your income taxes.
Alternate names for Gross Income are: Pre-tax income or before-tax income.
How Gross Income Works
If you're paid a salary, that's your gross income. If you receive bonus payments, these also count as gross income.
If you're an hourly worker, your gross income is your hourly wage multiplied by the hours you worked. Gross wages are also on the W-2 forms received from employers at tax time.
Your total gross income can come from either your work as an employee, or your work as an independent contractor, freelancer, or self-employed person.
For example, you may also have income from:
- Freelancing
- Self-employment
- Consulting
- Side jobs, such as driving for Uber or Lyft
- Tips
- Alimony
- Selling items at a swap meet, craft fair, or other venues
- Gambling or lottery winnings
- Rental property income
- Oil, gas, or mineral rights
- Selling goods on Amazon, eBay, Etsy, or any other online platforms
- Interest, dividends, and capital gains from investments
- Royalties
Your gross income from work as an employee is usually reported and handed to you by your employer in a W-2 form. While your gross income as an independent contractor is usually reported and handed to you on a 1099 form.
It's important to report all of your earned income when you file your income tax return. Even income you receive from a side job that is not reported on Form 1099s, and even if you have no income, it is always recommended that you still file a yearly tax return.
If you need to file your US tax return, we can get this done right away. If you have more questions, or need further guidance on planning your tax strategy, let’s discuss. I'm always happy to provide detailed and personalized guidance through a 1:1 consultation. You may book the best day and time for you to meet by contacting me to schedule your consultation.
