Most income a taxpayer receives is normally considered taxable. However, there are some types of income that are only partially taxed or not taxed at all.
Here are some common examples of items which are not included in income:
- Adoption Expense Reimbursements for qualifying expenses
- Child support payments
- Gifts, bequests and inheritances
- Workers’ compensation benefits
- Meals and lodging for the convenience of your employer
- Compensatory Damages awarded for physical injury or physical sickness
- Welfare Benefits
- Cash Rebates from a dealer or manufacturer
- Economic Stimulus Payment received in 2008
Here are some examples of income that may be taxable under some circumstances but not taxable in others:
- Life insurance – If a life insurance policy is surrendered for cash, any proceeds that are more than the cost of the policy must be included in income. Proceeds from a life insurance policy paid to you because of the death of the insured are not taxable unless the policy was turned over to you for a price.
- Scholarship or Fellowship Grant – Money received as a qualified scholarship or fellowship is not taxable if you are a candidate for a degree. However, amounts used for room and board do not qualify.
All other income such as wages, salaries and tips must be included in your income, unless the law specifically excludes it. Bartering, an exchange of property or services, is also taxable income. The fair market value of goods and services must be included as income for both parties concerned.
For more information on taxable and nontaxable income, visit www.irs.gov.