If you're curious about someone's financial situation, there's no better place to look than a tax return. Your taxes tell a lot about your finances, including not only how much money you make but where that income came from and how much of it there was. The IRS doesn't make individual returns available to the general public, but it does provide total figures for all of the taxpayers who file returns in a given year.

The average American taxpayer claimed $66,728 in income on their tax returns, according to IRS figures for the most recent year in which return information was available. Below, you'll learn where that income comes from.

How America earns its income

Income Source

Amount of Income

% of Total

Wages and salaries

$6.78 trillion

67.3%

Taxable interest

$93.9 billion

0.9%

Dividends

$254.7 billion

2.5%

Taxable state tax refunds

$30.1 billion

0.3%

Alimony

$10 billion

0.1%

Business income

$317.3 billion

3.2%

Capital gains

$687.4 billion

6.8%

Other gains

$9 billion

0.1%

Taxable IRA distributions

$235 billion

2.3%

Taxable pension distributions

$663.2 billion

6.6%

Rental real estate, royalties, partnerships, and similar entities

$679.4 billion

6.7%

Farm income

($8.3 billion)

(0.1%)

Unemployment compensation

$33.3 billion

0.3%

Taxable Social Security benefits

$261.2 billion

2.6%

Other income

$39.2 billion

0.4%

Data source: IRS.

It shouldn't come as any big surprise that the lion's share of income comes from wages and salaries. More than four-fifths of American taxpayers report at least some wage and salary income, and employee income made up 43% of gross domestic product in 2015.

What's more interesting is the breakdown of income from other sources. Business income makes up a small portion of overall personal income, and it's relatively rare, with just one in six returns having any income from a business source. However, keep in mind that taxpayers only have to report net income from business interests, allowing the business to take deductions before including the number on their tax returns. The farm income figures bear that out, showing that in many cases, farms lose money. Indeed, many small businesses are only marginally profitable regardless of the industry they serve, which deflates their numbers further when you're looking at average figures.

More importantly, some businesses are set up as partnerships, S corporations, or other pass-thru entities, and their income will often show up on the tax-return line for rental real estate and partnership income instead of on the business income line. Looking more closely at the details, more than 90% of the income reported on this line is attributable to business interests.

Money in bundles.

Image source: Getty Images.

How investors get their money

The mix of different sources of investment income is also revealing. More taxpayers report interest income, but it represents less than 40% of what Americans receive in dividend payments. Even when you factor in tax-exempt interest, dividends still emerge as the winner. However, capital gains dwarf both categories, showing the importance of long-term appreciation in producing total return for the average American investor.

Real estate and alternative investments also make up a sizable chunk of the typical American's income. Rental real estate, royalty payments, and other related income comprise about $60 billion of the line on which it's included, again after taking appropriate deductions into account.

Income sources for retirees

Finally, the mix of income sources for retirees sheds some light on what older Americans do with their money. Pensions and annuities bring in more taxable income than Social Security and IRA distributions combined. However, only a portion in each category is actually subject to tax. In some cases, that's appropriate, because the nontaxable portion of pension or annuity payments often represents a return of initial capital rather than actual profit. For Social Security, the vast majority of benefits go untaxed, and even among those who had to report their income, less than half of what they get from Social Security gets included on their tax returns.

The relatively small amount of IRA distributions suggests that most Americans don't take advantage of these tax-favored accounts. More than twice as many taxpayers claimed pension payments than IRA distributions during the year of the IRS' most recent data. Given that IRA distributions would also include money that initially came from a 401(k) employer plan before getting rolled over to an individual's own retirement account, it's apparent that taxpayers are more comfortable with keeping their retirement money with their employers even after they retire and start taking benefits.

Look at changing your income mix

Most taxpayers get the bulk of their income from wages and salaries, and that leaves many workers struggling to make ends meet from paycheck to paycheck. The easiest way to change that is to save more and look to invest your savings. If you do, then interest, dividends, and capital gains will boost your overall income and create a positive feedback loop that will put you in a position to have income that's greater than the average American over time.

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