What is “gross income” and more importantly, why do we even care?
This is one of the most pivotal of income tax questions.
“Gross Income” is one of the most important income tax rules and it really is a starting point in income tax calculation and in understanding how much you owe Uncle Sam.
Now, let’s confuse you by getting all taxy and legal. Don’t worry, we’ll ease the pain and translate these income tax rules, once we’re done with the legal jargon.
Section 61 of the Internal Revenue Code defines “gross income” as:
Can you see the problem with that definition? It’s exceedingly broad and doesn’t really define much. In fact, it essentially just defines “income” as “income.” It’s somewhat like saying “the definition of ‘dog’ is ‘a doglike animal.’”
All income, from whatever sources derived.
Perhaps a little elaboration is in order.
Stay tuned for more posts in the Be Tax Savvy! series…
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