Taxable or NonTaxable Income?

Generally, most income you receive is taxable, according to the IRS. But there are some areas where certain types of income are partially taxed or not taxed at all. A complete list is available in IRS Publication 525, "Taxable and Nontaxable Income."

Some common examples of items not included in your income are:

  • 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

If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Otherwise, life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price.

Another example of income that you may or may not exclude is a scholarship or fellowship grant. If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.

These examples are not all-inclusive. For more information, visit the IRS Web site at www.irs.gov and view or download Publication 525 through the "Forms and Publications Finder." It is also available by calling toll free 1-800-TAX-FORM (1-800-829-3676) and at local IRS offices.


This daily Tax Tip has been provided by the Internal Revenue Service.

You may like these other stories...

The law makes it difficult for itemizers to deduct medical expenses. To reap any write-off, you must pay bills that aren't covered by insurance, reimbursed by employers or otherwise satisfied by, for example, a company-...
Drug patents held overseas can pare makers’ tax billsAs the Obama administration tries to stop companies from avoiding taxes by moving their headquarters overseas, the makers of some of the world’s most lucrative...
Starting in October, the IRS will send warning letters to tax return preparers who appear not to be complying with Earned Income Tax Credit (EITC) due diligence requirements.Section 6695(g) of the Internal Revenue Code...

Already a member? log in here.

Upcoming CPE Webinars

Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.