Taxpayer 101: What is Gross Income?

October 18, 2021

Did you ever wonder what is considered “gross income” in the U.S.? Well, even though it seems such a simple term and self-explanatory, it actually is a little more complex than it seems. The Internal Revenue Service (IRS) defines gross income as “all income from whatever source derived except as otherwise provided”. This is a pretty large definition which often creates confusion. 

Income Types

Section 61(a) of the Internal Revenue Code lists the following types of income that constitute gross income, but this list is not exhaustive:

  1. Compensation for services, including fees, commissions, and fringe benefits
  2. Gross income derived from business activities
  3. Gains derived from dealings in property
  4. Interest
  5. Rents
  6. Royalties
  7. Dividends
  8. Alimony and separate maintenance payments (executed before 2019)
  9. Annuities
  10. Income from life insurance and endowment contracts (This is a broader application than the general exclusion for proceeds due to death)
  11. Pensions
  12. Income from discharge of indebtedness
  13. Distributive share of partnership gross income
  14. Income in respect of a decedent (income earned but not received before death)
  15. Income from an interest in an estate or trust 

Forms for Different Income Types

If an individual has income from one or more of these sources, then that they have to report is as gross income. Each source of income is reported via a specific form. For example, the following information returns provide potential sources of taxpayer gross income:

  • W-2 – Wage and Tax Statement
  • W-2G – Certain Gambling Winnings
  • Forms 1099-B – Proceeds from Broker and Barter Exchange Transactions
  • Form 1099-C – Cancellation of Debt
  • Form 1099-DIV – Dividends and Distributions
  • Form 1099-G – Certain Government Payments
  • Form 1099-INT – Interest Income
  • Form 1099-K – Payment Card and Third Party Network Transactions
  • Form 1099-MISC – Miscellaneous Income 
  • Form 1099-NEC – Nonemployee Compensation
  • Form 1099-OID – Original Issue Discount
  • Form 1099-PATR – Taxable Distributions Received from Cooperatives 
  • Form 1099-Q – Payments from Qualified Education Programs
  • Form 1099-R – Distributions from Pensions, Annuities, Retirements or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
  • Form 1099-S – Proceeds from Real Estate Transactions
  • Form 1099-SA – Distributions from an HSA, Archer MSA, or Medicare Advantage MSA 

This is a lot of information to process and it can be confusing, but we are here to help! 

Migration Resource Center Tax Services

The Migration Resource Center staff has a team of tax consultants, tax attorneys, enrolled agents, and CPAs. We can assist you with tax planning as well as reducing tax. In addition, we provide workshops on the Citizenship Interview and Test, Taxes, and Personal Finance. We offer workshops both online and in traditional classroom environments.

Contact Migration Resource Center Taxpayer Services now for assistance with your taxpayer concerns. Use our online form or call (646) 827-2959.