Which type of income must be reported on a tax return?

The requirement to report all sources of income, including wages, dividends, and capital gains, is fundamental to tax compliance. Taxpayers are obligated to declare their entire income to the tax authorities to accurately assess their tax liability.

Wages earned from employment represent a straightforward source of income that is typically reported as part of an individual's earnings. Dividends received from investments in stocks also contribute to an individual's income and must be disclosed. Capital gains, which arise from the sale of assets such as property or investments, are similarly recognized as taxable income.

This comprehensive approach ensures that all forms of income are accounted for, preventing underreporting and ensuring that the correct tax rate is applied to the taxpayer's total income. By mandating the disclosure of various income sources, tax authorities can enforce equitable taxation based on an individual’s overall financial situation.

Other choices mention limitations, such as reporting only capital gains or self-employment income, or only income above a certain threshold. However, tax regulations often require a more inclusive reporting framework that captures the full picture of an individual’s income.