With Forex trading becoming increasingly popular, it’s important to understand even the most basic concepts related to the market. In this article, we’ll dive into gross income meaning in Forex and what it means for traders.
What is Gross Income?
Gross income, or gross pay, is the total amount of money an individual earns each year before taxes or other deductions are taken out. It includes wages, salaries, tips, bonuses, commissions, and any other income received before deductions are made. All income earned, including income from dividends, interest, rental income and pensions, also known as “passive” income, must be included in gross income. Gross income is the figure used to calculate taxes and other costs associated with earning income.
Calculating Gross Income
Gross income is an important figure when it comes to managing finances. To calculate gross income, an individual must first list all their income sources over the course of the year. This includes wages, bonuses, tips, commissions, investments, rental income, pensions, and any other one-time or regular sources of income. Once all sources of income are listed, the individual can then add them up to get a total gross income. Depending on the total figure and the tax bracket they are in, an individual can then calculate what their tax liability and other costs associated with their income may be.
Gross Income vs Other Income Types
Gross income is not the same as other types of income, such as net income. Net income is the total amount of money an individual earns after deductions have been taken out. This includes taxes, as well as contributions to programs such as Social Security or Medicare. Net income is the figure used to determine an individual’s take-home pay, and is much smaller than their gross income. Gross income is also distinct from taxable income, which is the amount of money an individual must pay taxes on, after deductions and exemptions have been applied.
