What is annual income?

Annual income is the total income that you earn over one year. A calendar year is January 1st to December 31st of the same year. The U.S. Federal Government defines a fiscal year as starting on October 1st and ending on September 30th of the following year. The majority of annual income calculations rely on the fiscal year calculation.

What does annual income include?

Annual income includes a variety of types of income. Here are the various types of you can include as your annual income:

Salary and employment income: Employment income includes your salary, paid wages, overtime pay, tips and bonuses before deductions. All the income that you generate through the work you do throughout the year is part of your annual income.

Social security and pensions: Your annual income includes any money you receive from social security and pensions. Social security and pensions are reserved for retirees, disabled workers and the families of retired, deceased or disabled workers.

Welfare and disability assistance: Welfare and disability assistance includes any money that you receive from the government that ensures that basic human needs can be met. Your annual income includes any government assistance.

Gained interest and income from investments: Making income from the sale of stocks, properties or other income-generating investments is included in annual income. Your yearly income also includes any interest gained from savings accounts.

How to calculate annual income

While some parts of your annual income will be easy to calculate with simple addition, other income will take some extra calculations. If you start a new job part-way through the year, you have yet to work for an entire year at your new job, and you must calculate to estimate your yearly income. Here is how to calculate your annual income.

Make a list of all income sources
Write a list of all the types of income from the list above that you are receiving income from. Be sure to include how much you make from each source

Calculate all yearly income
You can add together any income that you have a full year of history for.

Calculate all monthly income
Any new income that you receive monthly but haven’t yet reached a full year of income requires a simple calculation. To find your estimated annual income, multiply your monthly income by 12 since there are twelve months in a year.

Calculate all hourly wage income
For income that you receive from employment that began less than a month ago, you can use a calculation based on your hourly wage and weekly work hours.

Calculate all hourly income
Using your hourly wage, you can then determine your annual employment income

Calculate final annual income
The final step is adding your yearly, monthly and hourly income calculations together to get your annual income.