There are some factors that will be used in computing a monthly gross income. The following paragraphs provide information about how to calculate the gross monthly income for various tax categories.
Eligible There is only one modified adjusted gross income (MAGI) for single taxpayers and married individuals, and it is $75,00 for other taxpayers. The MAGI consists of the total amount of your taxes, any applicable tax credits, and any other deductions including retirement and student loans. For taxpayers who have more than one dependent, you need to include their incomes as well.
Amount of taxable income You can compute your gross monthly income as of the day when your tax return was filed. On that date, you will have had enough time to consider the various tax provisions. To get an accurate picture, it is advisable to have a look at a year-end financial statement. Your financial situation and current expenses can also be taken into consideration before making calculations.
Taxable income If you are a resident alien, you can include the gross monthly income of your dependent spouse in your taxable income. This applies whether you file as single or a married couple.
Other taxes Some taxes, such as those on rental properties, on capital gains, and on unemployment insurance are excluded in calculating your monthly gross income. In addition, some tax expenditures are not taken into account when computing your gross monthly income. Examples of tax expenditures are the mortgage interest deduction and the home equity loan interest deduction. The tax rate that applies to your gross income is also taken into account.
Federal tax Most tax provisions apply to both single and married taxpayers. Federal tax provisions vary between the income tax rates, which are generally higher for the higher income brackets. The other tax rates are lower for those with low incomes. Income tax rates are based on taxable income, which means taxable income minus allowable deductions and tax-exempt income.
Local tax is calculated by multiplying the federal and state tax rates. The state tax rate is usually higher, due to various local tax levies such as property tax, sales tax, and real estate tax. The local tax rate is lower than that of the federal tax because local governments charge different rates on local items. In some states, the state’s income tax rate is lower than the county’s tax rate.
Monthly gross income is the sum of all the tax-deductible income. All income tax, credit, and social security benefits are included. If your gross monthly income is lower than the amount required to calculate your state or local tax liability, you may be able to reduce the liability by reducing the state or local tax liability.
Social security There are two types of social security benefits. The first is called Social Security disability, and the second is called SSI or Supplemental Security Income. Disability benefits require a specific dollar amount, whereas SSI benefits require a fixed benefit amount and a specified frequency of payment. The Social Security system pays benefits to retired, disabled, blind, or otherwise incapable people, but does not pay benefits for survivors or children.
Medicare Part A and Part B The two Parts A and B of the Medicare program to provide coverage. Part A covers hospital expenses, rehabilitation, and x-ray fees. Part B provides coverage for physician and outpatient care services, home health care services, prescription drugs, and outpatient medical and nursing care.
Medicare Supplement Insurance Part A requires the purchase of Medicare Part B from an approved insurer and Part B is purchased by purchasing the Medicare Part A and Part B coverage from the Medicare Part B plans. Medicare Part C is a supplemental health plan, available to those who are not covered by any of the Part A or B plans. With Medicare Supplement, the insured does not have to pay for the deductible before the insurance will pay. The insurance companies are reimbursed from the trust fund for any of the cost that exceeds the amount that was paid by the insured. However, there are exceptions; for example, Medicare Part D coverage will cover preventive care and certain surgical procedures.
Medicare Part D and Medicare Part B and C coverage have special rules. If your Medicare supplement does not cover all of your deductibles, you must pay more than the monthly gross income limit. If you are enrolled in Medicare Part B and C, the insurance companies will pay the difference between your monthly gross income and the maximum allowed deductible.