© FTI Publishing, LLC 2013 -
Individual Income Tax Guide
Your gross income before adjustments or deductions is reported in the “Income” section on page 1 of Form 1040. Your gross income includes income from all sources, unless the income is otherwise excluded from gross income under a section of the tax code. Income can be received in the form of money, property, or services.
You report the components of gross income on lines 7 through 21 on page one of Form 1040. The total of these lines is reported on line 22.
Constructive Receipt of Income: In general, income is included in your gross income when you have constructively received the income. You have constructively received income when you have access to the income or it is available to you, even if you do not have actual possession of the income.
Example: You receive a check for work you have done in 2016 but do not cash or deposit the check until 2017. Because you had access to the income in 2016, it is taxable to you in 2016.
For more information about the constructive receipt of income, see the Constructive Receipt page.
Assignment of Income: You cannot avoid having to include income in your gross income by assigning the income to another person before you receive it.
Example: You have your employer pay part of your compensation directly to a charity. The amount paid to the charity is included in your income; however, if the amount paid qualifies as a deductible charitable contribution, you may be able to take a deduction for it on Schedule A if you itemize deductions.
Example: You have your employer pay part of your pay directly to your ex-
For more information about the assignment of income, see the Assignment of Income Doctrine page.
Prepaid income: In general, if an individual receives payment in one year for services that he or she will provide in a future year, the payment is included in gross income in the year it is received, not the year in which the individual performs the services.
Example: You receive a payment in 2016 for providing landscaping services in 2016 and 2017. Although you will not perform some of the services for which you are being paid until 2017, the full amount of the payment is included in your income in 2016.
Lines in “Income” Section of Form 1040
Each line in the Income section on page 1 of Form 1040 is discussed below.
Line 7 – Wages, Salaries, Tips, etc.: Employee compensation, including wages, salaries and tips, and certain other compensation related income, is reported on this line. For most taxpayers, the main item reported on this line is employee regular salary or wage compensation reported to the taxpayer box 1 on Form W-
Wages or salaries: Wages, tips, and other compensation related to services you (and your spouse, if you are filing married filing jointly) provided as an employee that are reported to you by an employer in box 1 of a Form W-
If you didn’t receive a W-
Other income reported on Line 7: The following income items that are not include in box 1 on Form W-
Chapter 2 – Income
Table of Contents