The difference between gross and net income is that gross income is the total amount of income made and net income is the total amount of income made after taxes and other expenses have been subtracted. The total gross income or gross amount can refer to total profit or total sales.Know More
Salaried employees are taxed on their gross income while businesses and self-employed people are taxed on their net income. This was established in the Income Tax Act of 1961 for the United States. The net income expenses can include selling, general and administrative expenses as well as interest payments.
The term "gross margin" is equal to the gross income as a percentage or revenue whereas the net margin is equal to the net income as a percentage of revenue. Net income is sometimes referred to as "the bottom line" because net income is always listed at the bottom of an income tax statement. In the United Kingdom, net income is also known as "profit attributable to shareholders."
An example of net income and gross income would be a self-employed businessman. Say he makes $50,000 for the year, but he has $20,000 in deductions (expenses) and credits. This means that he has a taxable income of $30,000. Then his income tax of $5,000 will need to be subtracted to arrive at $25,000. So, $25,000 is his net income and $50,000 is his gross income.Learn more in Financial Planning
The income tax filing requirement for a U.S. citizen or resident depends on the taxpayer's gross income, filing status and age. For 2014, a single nondependent taxpayer under 65 must file if his gross income exceeds $10,150. Married taxpayers under 65 file with income over $20,300, according to the I.R.S.Full Answer >
Income reported a 1099 form is generally treated as ordinary taxable income, according to the IRS, and must be added to the gross income before any adjustments are made on the 1040 or 1040EZ form. However, many individuals who receive 1099 forms also must pay additional self-employment taxes.Full Answer >
The formula for operating income is gross income minus operating expenses minus depreciation and amortization. Operating income is the revenue that remains after all variable and fixed costs are accounted for.Full Answer >
As of 2010, the median net worth for Americans aged 65 and older was $170,128, according to the U.S. Census Bureau. The median family net worth for households aged 65 to 74 was $206,700 according to the Federal Reserve Survey of Consumer Finances in 2012.Full Answer >