Decode Your Gross Income
This tool helps you understand what income is taxable, what's not, and how to maximize your tax benefits. Explore common income sources, discover valuable tax-free exclusions, and use our interactive calculators to see how rules apply to you.
What's Included in Gross Income?
Gross income is broad and includes more than just your salary. Below are common categories of taxable income. Understanding these is the first step in managing your tax liability.
Wages & Compensation
- Money, property, or services received for work
- Bargain purchases from an employer
- Guaranteed payments to a partner for services
- Taxable fringe benefits (e.g., personal use of company car)
- Life insurance premiums for coverage over $50,000
Investment & Property
- Interest from corporate or federal bonds
- Dividends from corporate earnings & profits
- Gains from the sale of property (e.g., stocks, real estate)
- Rental income from properties (Schedule E)
- Royalties
Other Common Income
- State/local tax refunds (if you itemized in the prior year)
- Alimony received (for agreements pre-2019)
- Prizes, awards, and gambling winnings
- Cancellation of debt (with some exceptions)
- Unemployment compensation
Tax-Free Benefits & Exclusions
Not all income is taxed. The law provides many valuable exclusions that can significantly reduce your tax bill. Explore some of the most common tax-free items below.
Interactive Tax Calculators
Rules around retirement accounts and Social Security can be complex. Use these simple calculators to get a clear picture of how they apply to your financial situation.
IRA Distribution Calculator
Social Security Taxability Estimator
Business & Rental Income Basics
Special rules apply when you earn income from a business or rental property. Here's a simplified look at the key concepts you need to know.
Schedule C: Sole Proprietorship
If you're self-employed, you report income and expenses on Schedule C. Net income is subject to both income tax and self-employment tax.
An activity is presumed to be a business (not a hobby) if it's profitable in **3 out of 5 years**.
Schedule E: Rental Real Estate
How you treat rental income depends on your personal use of the property.
Rented < 15 Days / Year:
Personal home. Rental income is tax-free. Expenses are not deductible as rental expenses.
Rented 15+ Days & Personal Use > 14 Days (or 10% of rental days):
Mixed use. Expenses are prorated and deductible only up to rental income.
Minimal Personal Use:
Rental property. All allocable expenses are deductible. Losses may be limited by passive activity rules.
