 # Annualized income

## Annualized income,

### Definition of Annualized income:

1. Annualized income can be calculated by multiplying the earned income figure by the ratio of the number of months in a year divided by the number of months for which income data is available. If, for example, a consultant earned \$10,000 in January, \$12,000 in February, \$9,000 in March and \$13,000 in April, the earned income figure for those four months totals \$44,000. To annualize the consultant's income, multiply \$44,000 by 12/4 to equal \$132,000.

2. Adjusting an income or return to an annual basis. Also called annualized return. Formula: Income or return x 12 ÷ Number of months (over which the income or return was earned or received).

3. Annualized income is an estimate of the sum of money that an individual or a business generates over a year's time. Annualized income is calculated with less than one year's worth of data, so it is only an approximation of total income for the year. Annualized income figures can be helpful for creating budgets and making estimated income tax payments.

Meaning of Annualized income & Annualized income Definition