Marcela must report both her $150,000 salary and the $5,000 year-end bonus as gross income for tax purposes. Gross income includes all earnings before deductions, and bonuses, though separate from regular salary, contribute to the overall income subject to taxation. Accuracy in reporting is crucial for tax compliance.
Marcela must report both her salary and the year-end bonus as gross income for tax purposes.
a) Marcela's annual salary of $150,000 is considered gross income, despite her take-home pay being $100,000 after various withholdings. Gross income includes all earnings before deductions, and while the take-home pay is what she receives, the full salary is the basis for tax calculations.
b) The year-end bonus of $5,000 is also considered gross income. Bonuses, like regular salary payments, are subject to taxation. Even though it is a one-time payment and separate from her salary, it contributes to her overall gross income and must be reported for tax purposes.
In summary, both Marcela's salary and year-end bonus are part of her gross income, forming the basis for calculating her tax liabilities. It is essential to report all sources of income, including salary, bonuses, and any other earnings, to ensure accurate and compliant tax filings.