Taxable vs. Non-Taxable Income
In general, the income you receive from any source is subject to federal taxation. This includes wages, salaries, commissions, interests, stock options and dividends, unemployment compensation, rental income and alimony. It also includes so-called “fringe benefits” such as company-paid gym memberships, company vehicles and holiday cash gifts from your employer. And it includes other forms of income such as canceled or forgiven debts or loans, money from offshore accounts, property you obtained through barte, and payments from employer-paid disablity or sickness and injury plans.
A few types of income are exempted from federal taxes. Knowing the exceptions could potentially reduce your tax bill.
Some of the most common forms of non-taxable income include:
Inheritances, Gifts and Bequests
Most inheritances and gifts you receive are not taxed. Note, however, that taxes are owed on estates that exceed the federal exemption figure.
Life Insurance Payouts
Any money you receive from a life insurance policy when someone diez is non-taxable. If you cash out a life insurance policy , though, that money is generally taxable.
Qualified Scholarship Money
Note that while money from a qualified scholarship is generaly non-taxable, any of that money that goes towards room and board is.
Other Non-Taxable Income
Some of these sources include municipal bond interest, most health care benefits, child-support payments, welfare payments and cash rebates on purchases. You can reduce the amount you owe in taxes by taking advantage of the full range of exemptions and deductions.
Article Resourse from Centennial Presents