Question

A taxpayer should include which of the following when figuring their federal gross income?

1) Wages, salaries, and tips
2) Interest and dividends
3) Business income
4) All of the above

Answer 1

A taxpayer should include wages, salaries, and tips; interest and dividends; and business income when figuring their federal gross income.

Step-by-step explanation:

When figuring their federal gross income, a taxpayer should include all of the following:

1. Wages, salaries, and tips
2. Interest and dividends
3. Business income

Each of these categories contributes to an individual's total income and thus needs to be reported on their tax return. The process can become complex depending on the sources of income and whether deductions are itemized or standard. The Internal Revenue Service provides forms such as the 1040EZ for simpler situations, but more detailed forms when there are additional income sources or potential deductions. The twentieth tax code of the US federal tax code is extensive and covers various types of income, including those mentioned above. Therefore, for most people, wages, interest and dividends, and business income will be relevant in determining their adjusted gross income, which is used to calculate taxable income after deductions and exemptions. The individual income tax is a substantial contributor to federal government revenue but represents less than half of the total federal tax revenue, which also includes corporate income taxes and social insurance and retirement receipts.