Understanding Gross Income
What Is Gross Income?
Gross income is the starting point for calculating federal income tax. Under the U.S. Internal Revenue Code, gross income generally includes all income from whatever source derived unless a specific law excludes it. The definition is intentionally broad so that nearly every economic benefit received by a taxpayer is presumed taxable unless Congress provides an exception.
Note
A good rule is: If you receive an economic benefit and no exclusion applies, assume it is part of gross income.
- Gross income is the foundation for determining taxable income.
- Income may be received in cash, property, services, or other economic benefits.
- Specific exclusions must be authorized by tax law.
Summary
Gross income includes nearly every form of economic gain unless the tax law specifically excludes it.