Taxable vs. Nontaxable Income

taxable_nontaxable_income

Most income is taxable, unless specified by law. Here are some basic rules for filing your tax return:

Taxable income includes:

  • All money you earn such as wages and tips,
  • Bartering; the fair market value of property or services received is normally taxable,
  • Life insurance policies redeemed for cash (taxed on the amount above the cost of the policy),
  • Scholarship income used for room and board,
  • Other income tax returns such as state or local refunds (reported on Form 1099-G).

Typically not taxable:

  • Life insurance proceeds paid upon death,
  • Qualified scholarships,
  • Gifts and inheritances,
  • Child support payments,
  • Welfare benefits,
  • Damage awards for physical injury or sickness,
  • Dealer or manufacturer cash rebates,
  • Reimbursements for qualified adoption expenses.

Always consult your tax advisor to ensure you are reporting income correct.