Seeking Xero beta testers! Apply now!
Sign up to be a beta tester
Menu
Gross income, also known as pre-tax income, is the total amount of money earned before any deductions or taxes are taken out. This includes all sources of income, such as salary, wages, tips, and investment income. For example, if someone earns a salary of $50,000 per year and also receives $2,000 in investment income, their gross income would be $52,000.
Taxes and deductions are then subtracted from gross income to calculate the individual's net income, also known as post-tax income. Deductions, such as those for 401(k) contributions or mortgage interest, can lower the amount of taxes owed.
For example, if the same individual in the previous example has $5,000 in deductions and pays $10,000 in taxes, their net income would be $37,000 ($52,000 - $5,000 - $10,000).
It is important to note that the taxes and deductions used in this example are for illustration purposes only and may not reflect actual tax rates or deductions. Understanding the difference between gross income and net income is important for personal financial management and tax planning.
Gross income is the total amount of money earned before any deductions or taxes are taken out. Gross income is before taxes.
After tax refers to the amount of money an individual has left over after taxes have been subtracted from their gross income. It is net income also known as post-tax income.
Here is an example of a table that lists various financial terms and whether they refer to amounts before or after taxes:
It's important to note that the terms used in this table are for illustration purposes only and the taxes and deductions can vary depending on the jurisdiction, tax laws and individual's financial situation
How To Find Gross Profit Percentage
Handling Sales Tax And Sales Tax Reporting QuickBooks Online
Customizing Forms and Templates in QuickBooks Online
Using QuickBooks For Project Management
Collaborating With Bookkeepers And Accountants In QuickBooks
.png){kind=small}
