Which term defines a person’s income before taxes?

Which term defines a person’s income before taxes?

• A. Gross
• B. Net
• C. Salary
• D. Wages

Answer: (A)

Gross income is the total amount a person earns before any deductions. It includes wages, salary, bonuses, and tips all counted prior to taxes, Social Security, retirement contributions, and other withholdings. Net income, in contrast, is what you actually take home after those deductions. Salary and wages describe how you’re paid, but they’re components of gross income, not the post-deduction amount. So the term that defines a person’s income before taxes is gross income. For example, $2,500 in salary plus $100 in bonuses before tax equals $2,600 of gross income. Net income would be that amount after taxes and other withholdings are subtracted.

Gross income is the total amount a person earns before any deductions. It includes wages, salary, bonuses, and tips all counted prior to taxes, Social Security, retirement contributions, and other withholdings. Net income, in contrast, is what you actually take home after those deductions. Salary and wages describe how you’re paid, but they’re components of gross income, not the post-deduction amount. So the term that defines a person’s income before taxes is gross income. For example, $2,500 in salary plus $100 in bonuses before tax equals $2,600 of gross income. Net income would be that amount after taxes and other withholdings are subtracted.