What constitutes gross income for a taxpayer?

Gross income for a taxpayer includes total worldwide income that is subject to taxation, which encompasses a wide range of income sources, not limited to employment earnings. Under the Internal Revenue Code, gross income is defined as all income from whatever source derived, unless specifically excluded by law. This definition includes wages, salaries, interest, dividends, rental income, and even income generated from foreign sources, as long as it is not specifically exempted.

This approach ensures that all taxpayers are taxed on their overall financial performance regardless of where the income was earned. For instance, if an American citizen earns income working abroad, it still constitutes gross income and must be reported, even if it is subject to special considerations like foreign tax credits or exclusions.

In contrast, other choices limit the scope of gross income to certain aspects or sources, which does not align with the comprehensive definition as dictated by tax law. Thus, understanding the full breadth of what constitutes gross income is crucial for accurate tax reporting and compliance.