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Ajay Kumar, CPA

908-380-6876

Taxable and Nontaxable Income Income

Most types of income are taxable including wages and tips (unless the l aw specifically excludes it). This  includes  non-cash  income from  bartering-the  exchange  of   property  or  services. In bartering, both  parties must  include  the  fair  market  value of  goods  or  services  received  as income on their tax return. Income  can  include  money,  property  or  services that you receive, but here in this article I want to highlight some examples of income that are usually not taxable:
  • Child support payments; (please note child alimony award is taxable)
  • Gifts, bequests and inheritances; (certain restrictions apply)
  • Welfare benefits;
  • Damage awards for physical injury or sickness (punitive awards are normally taxable);
  • Cash rebates from a dealer or manufacturer for an item you buy;
  • Reimbursements for qualified adoption expenses.
  • Life insurance proceeds paid to you because of an insured person’s death (however, cash redeemed over cost from a life insurance policy is taxable), and
  • qualified scholarship is normally not taxable as long as meant/used for tuition and required course books (room & board portion are normally taxable)
Also, if  you  received  a  refund, credit  or  offset  of  state  or  local  income  taxes, you  may  be required to report that amount as income. Again, in the end I would like to emphasize that each person's  situation  is  different  so  it's  important to fully consider your specific situation before deciding  what  sort  of  income  is  not  taxable.  For  additional  information,  please  check  IRS website at www.irs.gov

  • Donating Time and services to non-profit organizations 
  • Churches, mosques, temples, synagogues.
  • Boy and Girl Scouts, Boys and Girls Clubs of America, Red Cross, Goodwill, Salvation Army, United Way.
  • Fraternal orders, if gifts used for qualified charitable purposes.
  • Veterans’ and certain cultural groups.
  • Nonprofit schools, colleges, museums, hospitals, and organizations trying to find medical cures.
  • Federal, state, and local governments, if gifts are solely for public purposes, including nonprofit volunteer fire departments, and public parks facilities.
Ajay Kumar, CPA

 5 Villa Farms Cir;
Monroe Township,
New Jersey 08831, U.S.A.

Contact us

Email: akumar@saicpaservices.com, saicpaservices@gmail.com 

Office:
732-906-5656,
732-215-9600

Cell: 908-380-6876
Fax: 908-368-8638