Income — in plain language

Plain language

money or value a person or business receives over time, such as wages, rent, interest, or profit

• money coming in
• earnings
• what someone takes in

What to watch for

• Legal and tax definitions of income can differ from the everyday sense — some money you receive is 'income' for tax while some is not; a plain rewrite should not assume all cash received is taxable income.
• In trusts, 'income' is the return earned (interest, rent) as opposed to the 'principal' or 'corpus'; do not blur the two, since who gets income and who gets principal can be different people.
• 'Gross income' (before deductions) and 'net income' (after) are not interchangeable; a plain version should keep clear which one a clause means.

Everyday Money vs. Legal "Income". In daily life, income just means money coming in. In tax and other legal settings it is a defined term, and not every dollar received counts — gifts, loans, and certain other receipts may be excluded. A plain rewrite should avoid implying that everything a person receives is "income" in the legal sense.

Income vs. Principal in Trusts. Trust documents draw a sharp line between income (the earnings property produces, like interest or rent) and principal or corpus (the property itself). Different people may be entitled to each. A plain version should keep that distinction rather than treating all trust money the same.

Common Misunderstandings by Non-Lawyers.

• "Any money I receive is taxable income." (Not always — some receipts, like genuine gifts or loans, are not income for tax.)
• "Income and profit are the same." (Not exactly — income can be money coming in before costs, while profit is what's left after expenses.)
• "In a trust, income and the trust's assets are one pot." (No — income is the return, and principal is the underlying property, often going to different people.)

Legal definition

Money or value that a person or business receives over a period of time — for example wages, salary, interest, rent, dividends, or business profit. In law and especially in tax, "income" can have a precise, defined meaning that does not always match the everyday idea of "money I got," because some receipts are counted and others are excluded. In trusts and estates, income refers specifically to the earnings produced by property (the return), as opposed to the underlying property itself (the principal or corpus).

Meanings by context

trusts and estates: the earnings a trust's property makes, kept apart from the property itself

Examples

Where you'll see it

• tax filings and returns
• trust distributions
• child support and alimony
• financial disclosures

Related terms

• gross income
• corpus
• avails
• fruit
• dividend
• net income

Word details

Pronunciation

IN-kuhm

Part of speech

noun

Origin

Middle English — that which 'comes in' — from 'in' + 'come', money or value coming in

Domains

tax law, trusts and estates, family law, contract law

Frequency

very common

Formality

low