What is Gross Income?
Gross income is shown on the tax form 1040. Gross income is sometimes referred to as total income. On the 1040 tax form, gross income is calculated first then adjusted gross income is calculated to derive the taxable income. Below is the definition of gross income.
Definition of gross income
Gross income is defined by the total of earned income and unearned income.
What does gross income consist of?
- wages, salaries, tips, etc (from W-2 forms)
- business income (less losses)
- taxable interest income (Schedule B)
- dividend income
- taxable refunds, credits or offsets of state and local income taxes
- alimony received
- capital gain (less losses)
- Taxable IRA distributions
- Taxable pensions and annuities
- Rental real estate, royalties, partnerships, S corp, trusts, etc
- Farm income (less losses)
- Unemployment compensation
- Social security benefits
- Other income
From gross income, many adjustments can be made to arrive at the adjusted gross income figure. The adjusted gross income is used in determining many tax deductions and tax credits.