Taxable vs Non-Taxable Income

You can receive income in the form of money, property, or services.

Whether it’s taxable or not, is dependent on the type of income. All income must be reported on your tax return even if it is non-taxable. Additionally, your income is subject to tax unless it is exempted by law.

The following is non-taxable to the IRS:

• Municipal Bond Interest
• Money from a qualified scholarship
• Inheritances/gifts
• Alimony payments (for divorce/separation agreements finalized after 2018)
• Cash rebates
• Child support payments
• Most healthcare benefits
• Money that is reimbursed from qualifying adoptions
• Welfare payments
• Money from a life insurance policy when someone dies
• Some cancelled debts

You must declare all income such as compensation for your services. The IRS considers the following to be taxable:

• Wages/Salaries
• Commissions
• Unemployment compensation
• Self-employment income
• Rental income
• Strike pay
• Alimony (for divorce decrees finalized before 2019)
• Royalty payments
• Stocks, dividends and interest
• Fringe benefits

For more information for a complete list of taxable income, click here to go to the IRS publication.

This entry was posted on Wednesday, November 11th, 2020 at 5:50 pm and is filed under Income. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.