IRS Tips about Taxable and Nontaxable Income

tax money

Are you looking for a hard and fast rule about what income is taxable and what income is not taxable? The fact is that all income is taxable unless the law specifically excludes it.

Taxable income includes money you receive, such as wages and tips. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.

Some types of income are not taxable except under certain conditions, including:
• Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
• Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.
• If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Here are some types of income that are usually not taxable:
• Gifts and inheritances
• Child support payments
• Welfare benefits
• Damage awards for physical injury or sickness
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses

For more on this topic see Publication 525, Taxable and Nontaxable Income. You can get it at IRS.gov or call to have it mailed at 800-TAX-FORM (800-829-3676).

Additional IRS Resources:
• Bartering Tax Center
• Remember to include Form 1099-G income when you file your taxes

 

Article reprinted from IRS.gov

Get In Touch

Share On Social Media

Other Recent Blog Articles

Joe Erickson

Our People are our Most Valuable Asset — Meet Joe Erickson, CPA & Shareholder

August 15, 2019

To read Joe’s complete bio click here.

Read More

Social Security Insights: Can you still file a “Restricted Application?”

August 8, 2019

Written by Matt Boelter, Financial Advisor & Shareholder Choosing the wrong time to pull Social Security benefits can cost you hundreds of thousands of dollars over your lifetime.  On November…

Read More

Q3 Viridian Market Commentary

August 5, 2019

Written July 24, 2019 by Brian Johnson, Chief Investment Officer and Shareholder. Summary:  Returns have been stellar through the first half of 2019.  We’re looking to take advantage of pullbacks.…

Read More