Frequently Asked Questions On Gross Income

Filed under: Uncategorized - 25 Mar 2013  | Spread the word !

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Gross income actually represents the sum of money that people make without paying taxes or social contributions. The level of taxes applied on gross income is established by the United States tax law, within this country. Variations and different definitions on gross income can be found depending on the state, country or even area you may be interested in. Below you can find a list of the most frequently asked questions on gross income. By learning their answers you will be able to understand all there is to know about gross income, taxes and general income.


1. What is gross income?

Naturally, the first question you will be interested in is what is gross income. Gross income includes all income from whatever sources. It is not limited to cash, including all type of income, regardless of its provenience or form. It can easily be described as all income from whatever source derived, unless excluded by law. Under the terms of the law, there are certain types of income that are not listed as gross income.


2. What is income?

Now that you have a better idea on what gross income means, you should be certain that you know for sure what income includes. For starters, you should know that all residents of the United States are subject to tax, under the terms of the law. This includes individuals, corporations, estates, members of partnerships, but also other type of beneficiaries. Non-residents may be taxable on their US source income only. Taxable income is formed by gross income less allowable tax deductions.

Taxable income can include the following:

  • Wages;
  • Interest;
  • Dividends;
  • Gross profit;
  • Gains;
  • Rents;
  • Royalties;
  • Alimony;
  • Pensions;
  • Distributive share of partnership;
  • Income from any other sources.


3. What are income taxes?

One of the most important things you should know about income is that it always is taxable. Regardless of the type of income we may be referring to, unless there are no deductions or exceptions under the terms of the law, it is taxable. However, tax levels applied on different types of income can vary a lot. The type of income, as well as the sum and its source, are important factors in establishing tax levels.


So, as already mentioned gross income commonly includes all type of income, unless there are exclusions applied. This means that there are certain types of income which are excluded from gross income. They may include exempt income, exclusions or tax inclusions. Social security benefits, gifts and inheritances may also be listed here, as well as life insurance proceeds, compensation, scholarships, certain employee benefits and gains.

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Gross Income In The United States

Filed under: Uncategorized - 22 Feb 2012  | Spread the word !

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The gross income in the United States means the income level which is payed to a person working in an institution or organization. However the gross income will not be the same with the sum of money that employee will take home, meaning that it also includes taxes. So, from the gross income of an employee, part is paid to the state and part is given as a salary to the worker. The system establishing the gross income level is regulated by the law. Depending on the gross income, taxes are determined for individuals, corporations, but also for all type of organizations.

In other words, a gross income is a type of income, no matter the source or the companies regulating it. Most likely, the gross income is taxable, but this aspect can vary depending on the financial rules applied to each case. The sources of gross income are also variable, depending on every case, although most of them are taxable. Even if many people seem to make confusions on this matter, you should know that there is a major difference between the gross income and the net income. If the gross income is the full monthly income, the net income is the one established after tax deduction. For instance, before applying for a job, you need to know both the level of your net and gross income. If you are going to apply for a mortgage loan, most lenders will be interested in both these aspects. 

Making savings always is very important, mostly having under consideration the general status of the economy today. Getting a better salary and paying less for taxes surely is something we are all willing to obtain. There are different types of incomes and various income sources in the United States today. Tax level and tax systems are crucial in determining the incomes that people can spend each month. And everyone is submitted to a tax regulation within the United States. Taxation also exists for foreign persons, although the terms on this matter are much different from the ones generally applied to American citizens. 

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How to Increase Your Gross Income

Filed under: Uncategorized - 03 Feb 2011  | Spread the word !

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There are multiple ways to increase your gross income, that is the amount that you get before all of the taxes are taken out. You will always have the option of making an investment in stocks and bonds which might be able to give you a significant return if you make the right decisions. Although sometimes you investment won’t pay off for a while, especially with bonds, it is still a good way to increase your gross income. Millions of people all over the world invest in stocks which are essentially shares of companies that you buy and sell according to what they are doing as far as going up or down in value. While making these kinds of investments can be a great idea, there are definitely certain risks involved.

You can also increase your gross income by getting involved with online marketing, because there is a lot of moneyto be made here if you know what you are doing. There are tons of different things you can do with online marketing and most of the time they are very lucrative for people who have done the research and are not simply going in blind. Although there are some risks with online marketing because it is in a way an investment as well, you can make a significant amount of money from it.

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Gross Income vs. Net Income

Filed under: Uncategorized - 30 Jun 2010  | Spread the word !

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Knowing your gross income versus your net income is important when you?re applying for a mortgage or any other type of loan.

For most people, gross income is typically your income before all the deductions, such as federal, state and local income taxes, social security, disability and retirement plan contributions. Your net income is usually the result of subtracting those deductions.

If you?re self-employed and don?t get a regular pay check, the question of gross and net income gets a little more complicated.

Some say lenders generally consider the amount of money you pay taxes on is your gross income. If that number is low because you?re depreciating the cost of equipment, some say the cost of that year?s depreciation can be added back in to calculate your annual gross income for the purposes of applying for a loan.

If you?re taking a deduction for part of your home as a business use, you can add that back in to figure your annual gross income, as well as any deduction for using your car for business.

Some credit consultants suggest that the self-employed should average two years of income. The downside is if you had less income in the most recent year. Lenders hate to see declining income and will want to know why.

Getting a loan when you?re self-employed can be difficult, as lenders regard self-employed people as being more risky. The self-employed may have to pay a higher interest rate or may have to shop longer and harder to find a lender. Sometimes having an incredibly high credit score can offset the negatives of being self-employed.

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Modified Adjusted Gross Income

Filed under: Uncategorized - 20 Apr 2010  | Spread the word !

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Modified adjusted gross income (MAGI) is a modified version of your income that you report on your tax return. This is an important piece of information to know because it effects your ability and amount you can contribute to a Roth IRA. The MAGI is used as an alternative to the adjusted gross income (AGI) because the AGI can often be skewed and not be truly reflective of a person’s earnings.

The MAGI is truly just your AGI but without IRA conversions, rollovers, or minimum requirements of distributions. In addition, it adds the following deductions or exclusions: traditional IRA deduction, student loan interest deduction, tuition and fees deduction, domestic production activities deduction, foreign housing deduction, and bond interests. After adding all those applicable items, you end up with your final modified adjusted gross income figure.

The list of deductions listed above is not a comprehensive list. There are other allowable deductions that are not listed while other deductions that may be excluded. In order to understand exactly what you should deduct, you should consult the Internal Revenue Code section 62.

Overall, modified adjusted gross income is an important figure to know and understand for your yearly tax returns in order to determine what exactly can be contributed to your retirement programs. The MAGI can be found in Form 8606, Form 8859, and Form 8815.

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Adjusted Gross Income

Filed under: Uncategorized - 11 Mar 2010  | Spread the word !

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With tax season upon us and the deadline approaching quickly, many people have come to realize that they are very easily confused when they have to do their own, or even just want to understand how their taxes are prepared. Because of this, and the fact that most people don’t like to look foolish in front of others, they often remain silent and choose to not ask questions. One of the most common questions that people need answered though is what exactly some of the terms in the tax form are. The most common of these terms that is misunderstood or misinterpreted, is what someone’s adjusted gross income is.

The adjusted gross income (AGI) is a common term that is used for the amount of money that you made throughout the year. If you own a business or if you’ve worked multiple jobs the combined income of these jobs is what is meant by AGI. AGI can also include the tips you’ve made as well as money that you made by doing side work or helping other complete their own projects (only if you were compensated, of course).

However, aside from the normal money that you’ve earned through work, you also must claim the money that you’ve made through your investments in the stock market, savings accounts, retirement accounts, bonds, gifts (in excess of the legal allowable limit for non-taxable gifts), alimony payments and even money you earned for work you did fifteen years ago but still receive royalties for. Basically, any time you have made money or had money given to you, you must compile it to come up with an accurate AGI. Your adjusted gross income is one of the most important parts of the tax form because it is the number that will tell the IRS what bracket you’re in and also what your allowances and limitations on claims are.

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3 Tips For Saving Money In A Down Economy

Filed under: Uncategorized - 22 Feb 2010  | Spread the word !

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It can be very tough to save money in a down economy. The key to saving money during tough times is to remain diligent and never spend more than you absolutely have to. Living paycheck to paycheck is never an ideal situation for anyone and you will never be able to account for unexpected expenses. If you are interested in saving money in a down economy, but have not been able to, you may want to consider implementing the following tips and tricks into your everyday life;

Coupons Are A Great Way To Save Money

It may seem like common sense, but the truth of the matter is that not everyone utilizes coupons like they should. Coupons are a great way to save money when you are on a tight budget. Remember to clip any enticing coupons that you see between shopping trips and do not wait until right before you go shopping to do so. Organize your clipped coupons by store and expiration date so you know exactly what you have available.

Place A Percentage Of Every Paycheck In A Savings Account

A great way to save money is to set a set amount, or set percentage aside every time you get paid. Many people already practice this, but if you would like to be successful at it you must be diligent and try to never dip into your savings unless it is an emergency. Depending on the size of your paycheck each person should set aside a different amount.

Go Through You Cupboards and Make a List of What Not To Buy

How many times have you gone through your cupboards to make a list of what you need to buy prior to going shopping? Probably quite a bit. Have you ever thought of going through your cupboards and making a list of what not to buy? Try looking through your cupboards and helping yourself eliminate expenses for items that you probably do not actually need.

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The Value of Trades

Filed under: Uncategorized - 29 Jan 2010  | Spread the word !

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Those of us who are self-employed are all too aware of the necessity of being mindful of our Gross Income. We must be always alert to any means of keeping it as low as possible without showing it too low, which can trigger an audit.

Trades are one way of manipulating gross income, unless of course one just enjoys paying taxes. And, while there is an IRS form specifically for reporting trades, I have to believe it is one of the least used forms in existence.

A trade, service for service especially, more so than product for product, can be a very useful tool, because no one can tell anyone what a given service is worth. So an auto mechanic, for example, can trade for legal help straight across and save significantly on gross income, and the attorney isn’t hurt, either. One thing we must keep in mind is that IRS personnel were not born yesterday. If we report a trade at all, we must keep the numbers at least believable, if not exact. And both ends of the transaction must match. In the above example, no one can complain if the attorney trades with the mechanic at the mechanic’s rates or if he chooses to credit the mechanic at the attorney’s rates, or if it comes out somewhere in between; either way there is no violation. It is just a matter of negotiation between two bargaining parties.

It is in the negotiation that gross income goes up or down for each party until a mutually beneficial agreement is reached.

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Gross Income: When To File Taxes

Filed under: Uncategorized - 09 Jan 2010  | Spread the word !

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If you are wondering what your gross income must be in order to file taxes, keep reading for the answer to your question.. Your gross income is a combination of all the money, goods, and services your receive with the exclusion of social security benefits. The kicker is determining the minimum gross income you can make before having to file taxes.

If you have worked during the year, are age 65 or younger and filing single, the minimum amount of gross income is $8,950. If you are age 65 or older and your civil status is single, the minimum gross income requirement is $10,300. If you are married, plan to file a joint return, and both your and your spouse 65 years old or younger, the maximum is $17,900. The amount shoots up to $20,000 if your are married, filing jointly and under 65. If just one of the spouses is 65 or older, the minimum gross income is set at $18,950.

If you are married and filing separately, the minimum is $3,500 no matter what your age is. Filing head of household and below the age of 65? The minimum gross income is $11,500, however, if you are 65 or older, the amount increases to $12,850. Widowers under 65 with a dependent child are required to file if the amount is more than $14,400 and $15,450 if you are old than 65. Knowing the rules will help you to better manage your finances. Re-read this information and make right choices when filing taxes.

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Saving Money Where You Can

Filed under: Uncategorized - 12 Nov 2009  | Spread the word !

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Making money is hard enough when you have a lot of other bill that have to get paid such as electric bills and car insurance. These are just 2 bills that most people pay for but what is happening to the national minimum wage? Is the wage going up so that the common person can finally start trying to get out of the pile of debts that have been accrued or is the minimum wage seem to be going down bringing you further and further in debt? These questions are on everyone’s mind and rightfully so. There are a few things you can do to save the income you are getting for the rainy day or so you can save up and get something you want later on in life.

Making a budget is a great way to balance the money that is coming into your household. By learning where your money is going when you make the money, you can better plan on the bills that have to get paid so they are not late. Keeping track of the money that is earned and the money that is going out can save you money because a budget is designed to show you here your money is going.

Another way to save money or get out of debt is to cut out the impulse buying. For those people that don’t know what impulse buying is it is nothing more than spending money on things that you don’t really need. Going out to eat and buying a movie are examples of impulse buying and they can cut a lot of money out of your budget, bringing you further in debt.

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