Income Tax & Gross vs Net Income

Front

What is the formula to calculate net income?

Back

Net Income = Gross Income - Total Tax Deductions.

Front

Define gross income.

Back

Gross income is the total income earned before any deductions or taxes.

Front

What is net income?

Back

Net income is the amount of money an individual has after all deductions, including taxes, have been taken out.

Front

What are fixed expenses?

Back

Fixed expenses are costs that do not change from month to month, such as rent or insurance.

Front

How do you calculate gross income from hourly wages?

Back

Gross Income = Hourly Wage x Total Hours Worked.

Front

What is the significance of tax brackets?

Back

Tax brackets determine the rate at which income is taxed, with higher income levels being taxed at higher rates.

Front

What is the purpose of tax deductions?

Back

Tax deductions reduce the amount of income that is subject to tax, thereby lowering the overall tax liability.

Front

What does it mean if a tax bracket is empty or N/A?

Back

It means that no income falls within that tax range for the specified filing status.

Front

How do you determine the total tax deductions from a paycheck?

Back

Total tax deductions can include federal income tax, state income tax, Social Security, and Medicare taxes.

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 remains after all deductions are applied.