1. Employment Income:
• For salaried individuals, annual income is typically their annual salary before tax deductions.
• For hourly workers, multiply the hourly wage by the number of hours worked per week and then by the number of weeks worked in a year.
• Include any bonuses, commissions, or other forms of compensation.
2. Business Income:
• For business owners, annual income includes the total revenue generated by the business in a year.
• Subtract business expenses (operating costs, supplies, rent, utilities, etc.) from the total revenue to determine the net income.
3. Investment Income:
• Include income from investments such as dividends from stocks, interest from savings accounts or bonds, and rental income.
• Subtract any investment-related expenses.
4. Other Sources:
• Include any additional sources of income, such as alimony, child support, or other forms of financial support.
5. Calculate Gross Annual Income:
• Add up all the sources of income to determine the gross annual income.
6. Deduct Taxes and Withholdings:
• Subtract any taxes and withholdings to calculate the net annual income. Taxes may include federal income tax, state income tax, Social Security, and Medicare contributions.
