A question about people who claim large incomes on their tax returns

Factual Questions
1

It was my understanding that 10% of americans filed for an income of 75k or more, 5% for 110k or more, 1% for 293k or more and 0.1% for 790k or more. Roughly numbers like that.

Do those numbers indicate post-business deductions or pre-business deductions. I don’t know alot about tax laws but I remember someone who was always bragging about how he made 500k-ish a few years ago. What he negleted to tell people was his business expenses also came to about 440k that year. So if someone claims an income of 350k and owns a small business, is that 350k net income post business deductions or pre-business deductions and his actual net income would be closer to 80k or so?

2

I don’t know about the larger figures but the 110K mark is pretty easy to achieve with no business deductions. A married couple with college degrees who both work can easily top that figure in most big cities. That is only 55K a year each.

Mid to upper level management at most larger companies can easily make 100K to over 500k per person. I have known many couples who both have jobs of similar rank (generally in different companies). Combined, they hit well above the 200k mark just on salary with minimal business deductions.

3

To know for sure, you’ll need to point to a specific citation so we can check the method, but in every set of stats I’ve seen, the numbers were taxable income, after deductions. These numbers are only meaningful as an indicator of how many people are in each tax bracket and how much of the overall tax burden they bear, so pre-deduction numbers which don’t tell you anything about how much tax was actually paid would be fairly meaningless.

4

My mistake, those figures were for individual income earnings, not joint tax filings.

5

There are (at least) three numbers you might call income as reported to the IRS.
Total income (Form 1040 line 22)
Adjusted gross income (line 34)
Taxable income (line 40)

I’ve never seen statistics on total income (which is bigger than AGI by things like IRA deductions, moving expenses, alimony paid).

The difference between AGI and taxable income is your personal exemptions + your itemized dedcutions. I’ve seen statistics on both of these reported.

But in any case business deductions (things like the expenses of running your own firm) are deducted way back even before total income is computed. So I think the answer to your question is those figures are after business deductions.