I want to respond to the following poll on this forum:
http://forum.mrmoneymustache.com/welcome-to-the-forum/household-income-percentile/
but there is no explanation of what "income" means: gross, net or something else? I want to see if there is a general/accepted idea of what "income" is, and to adjust my thinking if my idea of "income" is divergent from what a convincing majority thinks.
My thinking, as a freelance translator in Japan:
A. Total revenue = The total amount of money clients pay for my services, including reimbursement for travel, accommodation and other expenses.
B. Business expenses = Any money I spend on the business, including expenses that will be reimbursed by clients, and tax deductible portions of communications, rent and the like.
C. Gross income = A-B.
D. Taxes = National and local income taxes due on gross income, and social security and social health insurance premiums. I count the latter as taxes because they are calculated based on C; I can only adjust those premiums by adjusting C.
E. Net income/Take-home pay = C-D.
I consider "income" with no other qualifiers to mean E. I use E to calculate my savings rate and guide my decisions on spending.
Two places I expect to differ from most: Counting health insurance as a tax, and lack of tax-sheltered retirement investment.
What does "income" mean to you? How do you count social security/health insurance premiums, and contributions to tax-sheltered retirement accounts?