Which term describes a person's income before any deductions?

Which term describes a person's income before any deductions?

• A. Gross
• B. Net
• C. Taxable Income
• D. Adjusted Income

Answer: (A)

The term that describes a person's income before any deductions is "gross." Gross income includes all earnings from different sources, such as wages, salaries, bonuses, rental income, and investment earnings, before accounting for taxes and other deductions like retirement contributions or health insurance premiums. This figure is crucial because it provides a clear picture of total earnings, which is used to determine tax obligations and financial planning. In contrast, net income refers to the amount left after all deductions have been made, including taxes, while taxable income generally pertains to the portion of gross income that is subject to income tax after specific deductions and exemptions. Adjusted income typically refers to gross income minus specific adjustments allowed under tax laws. Understanding these terms and their implications is essential for effective financial management and planning.

The term that describes a person's income before any deductions is "gross." Gross income includes all earnings from different sources, such as wages, salaries, bonuses, rental income, and investment earnings, before accounting for taxes and other deductions like retirement contributions or health insurance premiums. This figure is crucial because it provides a clear picture of total earnings, which is used to determine tax obligations and financial planning.

In contrast, net income refers to the amount left after all deductions have been made, including taxes, while taxable income generally pertains to the portion of gross income that is subject to income tax after specific deductions and exemptions. Adjusted income typically refers to gross income minus specific adjustments allowed under tax laws. Understanding these terms and their implications is essential for effective financial management and planning.