Is Your Income Taxable or Nontaxable?

In general, all income is taxable unless the law specifically excludes it. Taxable income includes money you receive, such as wages and tips, and also includes noncash income from property or services. For example, in a barter exchange, the fair market value of the good or service must be included as income on both parties’ tax returns. Certain types of income that are usually not taxable are as follows:

·         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

Some types of income are not taxable, except under certain conditions:

·         Life insurance proceeds 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 usually not taxable when the funds are used for tuition and required books, but funds used for room and board are taxable.

·         State or local income tax refunds may be taxable. With a state or local income tax refund, you should receive a 1099-G; if you have not received a 1099-G, contact the department to obtain the form.

If you have any questions, please contact us!

518 Arbor Hill Rd.

Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).