Question

Explain what gross income is and what types of income are included in gross income. What is normally deducted from gross pay by an employer on a paycheck to calculate net pay? What is the difference between gross and net pay?

Answer 1

Answer:

gross income

From and individual perspective Gross income is the total amount you earn before tax and deductions.

From a company perspective Gross Income refers to the revenues that are the payments received from the sales of a good or a service.

types of income

Gross income. is the total amount you earn before tax and deductions.

Net income.  is the total amount you earn after tax and deductions.

Earned Income. Earned Income is the money that you earn by doing something or by spending your time e.g. the money that you make in your job, the salary you get by working for someone else.

Profit Income. Is the income resulting from a company's year operation after costs, expenses, interest and taxes

Interest Income.  Is the income resulting from lending money, also known as interest

Dividend Income. Is the income resulting for buying stock from a company it is paid annually

Rental Income. Is the income received from renting a fixed asset e.g. apartment, house, warehouse

Capital Gains. Are the gains derived from the selling of a fixed asset e.g. apartment, house, warehouse

Royalty Income. Is the income received over time for the explotaition of a brand or artist work e.g. songs, movies, images.

Deductions from a pay check

The deductions most used  but not limited are the taxes: Federal, state and local payroll, Social security and Medicaid and Medicare.

Gross and net pay?

Gross pay is the quantity of money received before deductions such the taxes stated above: Federal, state and local payroll, Social security and Medicaid and Medicare.

Net pay is the quantity amount of money afterdeductions such the taxes stated above:: Federal, state and local payroll, Social security and Medicaid and Medicare.