If you meet the criteria to receive a 1099-MISC form at the end of the tax year, this document only provides information on gross miscellaneous earnings. Gross income refers to personal gains before expenses. Net income refers to wages after expenses. Understanding how much you net helps you gauge your monthly and yearly income; and if you're also an employee, you can include net income from wages to assess your actual earnings for the year.
1. Refer to your 1099-MISC form to calculate your business income for the tax year. Look at the column labeled "rent" if your income comes from rental properties Check the column labeled "non-employee compensation" if you're an independent contractor.
2. Add up other sources of miscellaneous income. Income from alimony, child support and royalties also appear on 1099-MISC forms and factor into your yearly income.
3. Locate paychecks received from your employer, if applicable. If you receive wages in addition to miscellaneous income, include this figure when tallying your income. Your last paycheck for the year will list your net income for the year.
4. Gather your receipts and calculate your yearly expenses. Add up receipts for office supplies, mileage, office equipment, business travel and other business-related costs if you're an independent contractor. Calculate the costs of home repairs, mortgage interest paid, insurance and property taxes if you're a rental property owner. If you're a statutory employee, and eligible to deduct work-related expenses, keep records of all eligible write-offs. Expenses might include vehicle mileage, supplies and business meals.
5. Take the total of all miscellaneous income and subtract yearly expenses from this total to calculate your net miscellaneous income for the year. For example, if miscellaneous expenses grossed $30,000, but you're eligible to deduct $5,000 in expenses, your net miscellaneous income equals $25,000.
6. Refer to your net income on your paycheck and deduct any work-related expenses from this figure, if you're an employee as well.
7. Add up your net income from wages and miscellaneous income to determine your total net income for the year. For example, if your miscellaneous income nets $25,000, and your wages net $40,000, your net income for the year is $65,000.
- Hoby Finn/Photodisc/Getty Images