SALARY- PAY

INCOME -WAGE -PAYMENT

Income refers to the money that a person or entity receives in exchange for labor or products. Income may have different definitions depending on the context—for example, taxation, financial accounting, or economic analysis.

For most people, income means their total earnings in the form of wages and salaries, the return on their investments, pension distributions, and other receipts. For businesses, income means the revenues from selling services, products, and any interest and dividends received with respect to their cash accounts and reserves related to the business.

• The term “income” generally refers to the amount of money, property, and other transfers of value received over a set period of time in exchange for services or products.
• There is no single, standard definition: income is defined according to the context in which the concept is used.
• Taxable income is the result of determining the annual total or gross income of an individual or entity and reducing that amount by the exclusions, exemptions, and deductions allowed under the tax law.

Understanding Income: There are different terms for income, depending on the quantity being measured.   Gross income means the total value of one’s salary or payments, without accounting for any cash outflows.   Net income refers to the income left over after subtracting taxes or fees. For individual earners,   Discretionary income is the amount they have available after paying for necessary expenses. For the purposes of taxation, income refers to the types of revenues that are eligible for Income tax. These definitions may vary by jurisdiction—salaries and sales are typically considered part of one’s Taxable income,    but inheritances and gifts usually are not. Although tax and accounting rules have similarities, each system has special rules reflecting its distinctive context and purposes. Generally, taxation and financial accounting measure income over a 12-month period. While financial accounting income is comprehensive, taxable income is calculated with special statutory exclusions, exemptions, and allowances that vary by tax status, income source, and individual and business decisions.

Taxable Income: For income tax purposes, the tax code attempts to define income to reflect taxpayers’ actual economic position. The general tax framework applies to taxpayers’ personal revenue (other than tax-exempt income) from all sources and offsets such revenue with deductions for expenses and losses to determine taxable income.

In addition, public policies may offer favorable taxation for people at certain income levels or for favored economic activities. Such policies include tax exemptions for government bonds, tax-favored treatment for retirement savings, tax credits for people below a certain income level, and promoting energy efficiency through special tax credits

Types of Income: Three categories of income are of principal concern to taxpayers: ordinary income, capital gain, and tax-exempt income.

• Ordinary Income: In the United States, the tax law distinguishes ordinary income from capital investments. Ordinary income encompasses earnings, interest, regular dividends, rental income, distributions from pensions or retirement accounts, and Social Security benefits. Ordinary income is taxed at rates ranging from 10% to 37% in 2022. Taxpayers whose net investment income exceeds specified thresholds pay an additional 3.8% net investment income tax.
• Capital Gains: Capital gains are the gains from selling assets that have appreciated in value. In the United States, the capital gains tax rates on assets held for more than one year are 0%, 15%, and 20%. Capital assets include personal residences and investments such as real estate, stock, bonds, and other financial instruments.
• Qualified dividends—that is, dividends distributed with respect to the U.S. and certain foreign corporate stock holdings that meet statutory holding-period requirements—also are taxed at capital gains rates

BONUS -PENSION- GRATUITY

A bonus is a financial reward that is given to an employee beyond their normal salary or wages. It can be given as an incentive to encourage certain behavior or to reward good performance. A bonus payment is usually made to employees in addition to their base salary as part of their wages or salary.

A bonus is a reward, which could be a monetary or a non-monetary one, that is given to an employee on top of their base salary. Bonuses can be a part of an organization’s employee benefits, which are promised to the employees for their achievements, contributions, or their tenure

Bonuses are separate compensation from your base salary or usual wages. Bonuses are one-time financial rewards that employers often use to: Attract new employees: Employers may use bonuses in their recruitment efforts in order to attract new employees.

PAY

Payment is the exchange of money, goods, or services for goods and services in an acceptable amount to both parties and has been agreed upon in advance. You can pay with cash, a check, a wire transfer, a credit card, a debit card, or even cryptocurrency. Understanding Payment.

Three methods employers use to compensate employees include salary, hourly wage, and commission. The method you select depends largely on the nature of each job position. For example, the commission is the typical payment method in sales positions while salary is typical in management positions.

According to this principle, an individual should be paid as per his/her performance. Thus, the compensation system, as far as possible, enables the individual to be rewarded according to his contribution to organization.