How to Estimate Your Family's Annual Income

Include salary, profit and rents collected when calculating your family's annual income.

People estimate their annual income for a number of reasons. You must report your income to receive scholarship grants for college and to pay taxes. People refinancing a mortgage or another type of loan may have to report their income, as well as those who pay child support or alimony. To balance your household budget, you need to know how much money will be coming in before you can decide how much you can afford to pay out.

Instructions

1. Look at earned income for yourself and your family members to find out the total amount of salary income for the family for the year. To figure out your monthly income, multiply your pay by 4.3 if you are paid weekly; 2.15 if you are paid every two weeks; and 2 if you are paid twice a month. Calculate your annual salary by multiplying that figure by 12. Make sure you are looking at the net income, which is the amount you receive after deductions like Social Security, unemployment insurance and taxes. Add income from extra employment, like summer jobs.

2. Add up all of the portfolio income for your family members on an annual basis. Portfolio income is generated by selling investments at higher prices than you originally paid. This is also known as "capital gains." Portfolio income can be generated by buying and selling such instruments as CD's, stocks, bonds and mutual funds. You also generate capital gains by profiting from real estate or other assets like antiques.

3. Tally the passive income for yourself and your family members that is received yearly. Income in this category includes rental income after paying such expenses as the mortgage and selling intellectual property. Passive income is typically recurring income that continues on an ongoing basis with little or no work from you.

4. List any additional income like governmental support in the form of loans or scholarships. Social Security and unemployment payments also count as income. For some purposes, you may want to include such items as support from family member and income tax refunds that are due when estimating the annual income for your family.

Tips & Warnings

• Make sure you have the paperwork to back up any income claims if you are using the information on an application or form.

• Read the fine print and understand what is considered annual income for your purpose. Items considered income for tax purposes may differ from items considered income when applying for scholarship grants.

References

• Three Types.com: The Three Types of Income
• University of Ottawa: Estimating your Income