Gross and Net Income

Front

What is Gross Income?

Back

Gross income is the total amount of money you earn before any deductions such as taxes or other expenses.

Front

What is Net Income?

Back

Net income is the amount of money you receive after deductions are subtracted from your gross income.

Front

What are Deductions?

Back

Deductions are amounts of money that are subtracted from your gross income, such as taxes, insurance, and retirement contributions.

Front

How do you calculate Net Income?

Back

Net Income = Gross Income - Deductions.

Front

If Yvonne's gross income is $703 and her deductions are $251.18, what is her net income?

Back

Yvonne's net income is $703 - $251.18 = $451.82.

Front

What does 'After Tax' mean in relation to income?

Back

'After Tax' refers to the amount of money remaining after all taxes have been deducted from gross income.

Front

What is the difference between Gross Income and Net Income?

Back

Gross income is the total earnings before deductions, while net income is what you take home after deductions.

Front

What is an example of a deduction?

Back

An example of a deduction is income tax, which is taken out of your paycheck.

Front

What is the purpose of calculating Net Income?

Back

Calculating net income helps individuals understand how much money they actually have available to spend or save after all deductions.

Front

What is the formula for calculating Gross Income?

Back

Gross Income = Net Income + Deductions.