Feature Articles: Taxes
Taxable or Nontaxable?
Reviewed and used with special permission from the IRS by: Brenda Procter, M.S., State Specialist & Instructor Personal Financial Planning, University of Missouri Extension
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:
- Qualifying adoption expenses paid by your employer
- 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. 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 under "Forms and
Publications Finder" or call toll free 1-800-TAX-FORM
(1-800-829-3676).
Source: IRS TAX TIP 2006-29
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Last update: Thursday, March 27, 2008
