Nontaxable and Taxable Income
Most of the income that you obtain is taxable. However, there are some instances wherein specific forms of income may be taxed partially or none at all. If you want to acquire complete details regarding this matter, you can refer to the IRS Publication 525. There are various items which are not part of your income. The most common are: the adoption expense repayments for your eligible expenses, payments for child support, inheritances, bequests, gifts, the compensation benefits of the workers, and welfare benefits. The lodging and meals for your employer's convenience is not included too. This goes the same for compensation damages which are provided for physical illnesses or physical injury. Another common example would be cash rebates which come from manufacturers or dealers.
While there are items which are specifically stated as not part of your income; there are some items which may not be or may be a part of your earnings. The first common example would be life insurance. When you surrender your life insurance policy in return for cash, you have to include within your income the proceeds which have higher value than your life insurance. When you are provided with life insurance proceeds due to the insured individual's death, this is not taxable. However, possible taxation may occur when the proceeds has been turned over for a given amount. A fellowship or scholarship grant may be or may not be taxable. When you are a degree candidate, it is possible for you to exclude the money that you have received. However, the cash that you accept for board and room accommodations is not eligible as nontaxable.
Knowing which item from your income is taxable or not taxable will be easier when you seek the advice of a professional. You will be able to learn more when you let a tax attorney counsel you. Or else, you can also hire the assistance of an accountant or a CPA. These individuals are trained over tax laws in order for them to cater to the inquiries of the tax payers. Deciding to avail of the services of tax professionals should not be done only when you have a problem with the IRS. As early as possible, you should make it a point to let an expert guide you through the preparation of your taxes. This way, there will be lesser instances of mistakes.
If ever you have questions regarding your taxes, get tax services help from the IRS or from other tax service centers. When you want to avail of free services, you have to know that you should be eligible. When you pass certain qualifications, the IRS has volunteer programs which aim to serve eligible tax payers. If you are not qualified, you can still avail of tax services which are offered by tax firms.