Final answer:
A) It includes all income before taxes
The true statement about the gross income of students is that it includes all income before taxes. Gross income encompasses wages and any other income sources prior to deductions. Disposable income is what's available after taxes are accounted for.
Step-by-step explanation:
The statement that is true about the gross income of both students given here is: A) It includes all income before taxes. Gross income is a comprehensive measure of income that includes wages, self-employed income, interest, dividends, and other sources of income before any deductions are made. It does not represent the take-home pay because it has not accounted for the deductions such as taxes paid, social security contributions, medicare, or other withholdings.
Gross income is critical to understand since it is the starting point for computing the taxable income, which is gross income minus allowable deductions and exemptions. Adjusted Gross Income (AGI) is a slightly more refined measure that adjusts the gross income by specific deductions but still before standard or itemized deductions are applied. Disposable income, on the other hand, is what remains after all taxes and transfers have been accounted for. It provides an insight into the actual financial resources available to individuals for spending, saving, or investment after fulfilling tax obligations.
The monthly income of a job position or the net annual income is calculated after subtracting the taxes, social security, and medicare from the gross income, reflecting the actual income that an individual receives for personal use.