Income
 |
Definition of 'Income'Money that an individual or business receives in exchange for providing a good or service or through investing capital. Income is consumed to fuel day-to-day expenditures. Most people age 65 and under receive the majority of their income from a salary or wages earned from a job. Investments, pensions and Social Security are primary sources of income for retirees. In businesses, income can refer to a company's remaining revenues after all expenses and taxes have been paid. In this case, it is also known as "earnings". Most forms of income are subject to taxation. |
 |
Investopedia explains 'Income'Most individuals gain income through earning wages by working and/or making investments into financial assets like stocks, bonds and real estate. In most countries, earned income is taxed by the government before it is received. The revenue generated by income taxes finances government actions and programs as determined by federal and state budgets. The IRS calls income from sources other than a job, such as investment income, “unearned income".The wages, salaries, interest, dividends, business income, capital gains, pension and annuity payments, rental income, farming and fishing income, unemployment compensation, jury duty pay, gambling income, bartering income, retirement plan distributions and stock options an individual receives in a given tax year are considered taxable income in the United States. Types of income that may be tax-exempt include interest income from U.S. Treasury securities (which is exempt at the state and local levels), interest from municipal bonds (which is potentially exempt at the federal, state and local levels) and capital gains that are offset by capital losses. Types of income that may be taxed at lower rates include qualified dividends and long-term capital gains. Social Security income is sometimes taxable, depending on how much other income the taxpayer receives during the year. The money an individual has left after taxes are subtracted from income is called disposable income. Most people spend this money on necessities like housing, food and transportation and on discretionary items like restaurant meals, vacations and cable television. |
Related Definitions
Articles Of Interest
-
Basic Investment Objectives
You might know about different asset types, but do you know how each type contributes to a particular goal? -
Preparing To Tap Into Retirement Income
You need to plan ahead to ensure a long and happy future away from the daily grind. -
The Beauty Of Budgeting
Make it to the end of the month, before you run out of money. -
Is Your High-Profile Job Worth The Price?
Certain careers can be prestigious and lucrative, but there are always costs. Find out if they're worth it. -
Get A Tax Credit For Your Foreign Investments
The foreign tax credit provides a break on investment income made and taxed in a foreign country. -
A Guide To Financial Designations
Find out which certifications can bring you the greatest career returns. -
Choosing The Best Disability Insurance
Social Security benefits can be hard to collect. Find out why you need disability insurance to protect your income, and learn how to choose the right policy for you. -
Should The U.S. Switch To A Flat Tax?
Some countries have begun charging a flat tax rate instead of the gradual tax system of the Western world. -
Returning To Work: Is It Right For You And Your Family?
Returning to the workplace can create some unique stresses. In the end, does the additional income justify the extra expenses? -
Top 4 Financial Jobs You Can Do From Home
You don't have to go to an office to make a great salary in the financial sector. Here are the top four highest paying financial jobs you can do from home.
Free Annual Reports