What Is Net Income For Tax Purposes
Full Video Transcript
Net income is the amount of income an individual or company receives after deducting all the expenses. Essentially, it is the profit an individual or company has made, after taking out all expenses. Other names used for net income are the bottom line, net profit, or net earnings. When looking at your income tax statement, the net income number is found on the last line of the income statement. The formula for net income is total revenues minus total expenses. Once you take out the total expenses from total revenues, what you are left with is the net income amount, or the amount you take home, and that figure is used to determine the amount of taxes owed.