Gross income is the total amount of money you earn before any taxes, deductions, or adjustments. It includes wages, salaries, bonuses, business income, investment income, and other sources of earnings.
Why It Matters
Gross income is the starting point for calculating taxable income. Lenders also use it to evaluate your ability to borrow money, such as when applying for a mortgage or loan.
Examples
- Employment income: Wages, salaries, overtime, bonuses, and commissions.
- Self-employment income: Profits earned from running a business or freelancing.
- Investment income: Interest, dividends, and rental income.
Final Thoughts
Gross income represents your total earnings before deductions. Understanding it is key to managing taxes, budgeting, and financial planning.