What Is Household Income?
Your household income is the combined total income of everyone in your household who is required to file federal tax returns. This figure is often used to determine marketplace savings on health insurance plans, and to see eligibility for government sponsored programs such as Medicaid.
Who Is Included in Household Income?
When calculating your household income, you will first want to start with yourself and your spouse, if you have one. You will also want to include anyone who you plan to claim as a tax dependent for that year. This might include your children, other children whom you care for living in the home, dependent parents and other dependent relatives.
If you are not legally married but have a domestic partner, include them in your estimate if you plan on claiming them as a dependent on your taxes or if you have children together.
If you have adult children under the age of 26 whom you would like included on your healthcare plan, include them in your estimate. If you share custody of a child, only include them if you plan to claim them as a dependent on your taxes for that year.
Do not include spouses who you are divorced or separated from, even if you still live in the same household. Adult children who are no longer dependent, and roommates should not be counted either.
How to Calculate Household Income
When calculating your household income for the year, there are many sources you will want to include in your estimate. A few examples of the income you should count are wages, tips, pensions, interest, 401(k) plans, alimony and stocks. You will also want to include rental income and royalties, unemployment benefits and Social Security Disability Income (SSDI).
If you have children with jobs, such as summer jobs or work-study programs, you should include their income in your estimate as well if your child would be required to file a federal tax return.
Is Household Income Counted Before or After Taxes?
Remember that household income is calculated from income before taxes and other deductions. If you make $30,000 and after taxes bring home $27,000, then your income counted toward household income is still $30,000.
Is There Any Income That Does Not Need to Be Counted?
There are some forms of income that you do not need to count toward your estimate. These include child support payments, gifts, inheritances, workers' compensation benefits and Supplemental Security Income (SSI).