Gross vs. Net Income

What is gross income?

• The amount of money earned after taxes and deductions.

• The total amount of money earned before any deductions.

• The amount of money left after paying for utilities.

• The amount of money earned from investments only.

• $38,000

• $62,000

• $50,000

• $12,000

Which of the following is NOT deducted from gross income to calculate net income?

• Taxes

• Health insurance premiums

• Retirement contributions

• Gross income from a second job

• $20,000

• $120,000

• $55,000

• $75,000

What does net income represent?

• The total amount of money earned from all sources.

• The amount of money earned before any deductions.

• The amount of money left after all deductions are made from the gross income.

• The amount of money spent on taxes only.

Which of the following would be considered a deduction from gross income?

• Overtime pay

• Federal income tax

• Bonuses

• Gross income from investments

• $42,000

• $18,000

• $60,000

• $47,000

What is the first step in calculating net income from gross income?

• Subtracting bonuses

• Adding overtime pay

• Subtracting deductions

• Adding gross income from a second job

• $75,000

• $125,000

• $100,000

• $25,000

Which of the following statements is true?

• Net income is always higher than gross income.

• Gross income is calculated after deductions.

• Net income is the amount of money earned before any deductions.

• Gross income is the total amount of money earned before deductions.