Adjusted gross income definition: The sum of all wages, dividends, tips, interest, capital gains, annuities, and any other income earned during a year
We now illustrate with real life examples.
Example #1:
In 2009, Peter earned 15,000 USD working part time as a taxi driver. He also earned 200 dollars a week working
as a math tutor for 20 weeks. Finally, peter earned 50 dollars of interest income from a saving account
What is Peter's adjusted gross income?
Earnings = weekly earning × number of weeks worked
Earnings = 200 × 20 = 4,000
Adjusted gross income = wages + interest income
Adjusted gross income = 15,000 + 4000 + 50
Adjusted gross income = 19,050 USD
Example #2:
In 2009, Martha earned 80,000 USD in real states investment. She also earned 50,000 dollars in annuities and 20,000 of interest income.
Finally, Martha made 100,000 dollars with her website selling educational software