Gross income can be several different things in the United States. In tax law for business, gross income signifies all proceeds realized from every source minus the cost of goods that have been sold. It is also used for individuals and pertains to all income earned from any and every kind of source.
As such, it is not simply cash that has been realized, but it can also be income received in kind, as property, or as services. For a taxpayer, gross income is commonly believed to be all of the monies and values received. Although most income is tallied into this figure, a few kinds of income are excluded deliberately.
For companies, individuals, trusts, estates, and others, gross income is necessary for figuring up the mandatory income taxes within the United States. Taxes are figured up using a taxable income number that starts with gross income and then subtracts permissible tax deductions. Taxes are then calculated based on the resulting taxable income.
Many different types of income are considered to be a part of the gross income category. Wages are the earnings for work performed payable as tips, salaries, and related income. Income made as a result of such personal service is always tallied up in a person’s gross income. Gross profits made from selling an inventory of products are also considered gross income. Gross profits result from sales prices of items minus the cost of the goods actually sold.
All interest received is also considered to be a part of gross income. Dividends, along with distributions of capital gains from companies or mutual funds are similarly a part of gross income. Gains on property that has been disposed of are also tallied into the gross income total after the extra proceeds beyond the adjusted cost in the property is determined. Also included are royalties and rents from intangible and tangible items.
A number of other non traditional types of income are also considered to be a part of this. Pensions, income from life insurance, and annuities income are counted. So are alimony, child support, and other maintenance payments. Shares of partnership income that are distributed fall under this category. Even the proceeds from national and state tax refunds are considered to be gross income.
The Internal Revenue Service claims that such gross income includes all forms of income from any source of which they are derived. As such, gross income can result from any gains having to do with labor, capital, the two together, or profits having to do with the sale of anything or a capital asset. A notable exception to gross income includes gifts and inheritances. While these could be taxed under the category of estate taxes or gift taxes, they are not deemed by the IRS to be a part of gross income.