Most types of income are taxable; however, some are not.
Income includes money, property or services that you receive.
Income that is not taxable includes: Child support payments, gifts, bequest or inheritance, welfare benefits, damage awards for physical injury or sickness, cash rebates from manufacturers for an item you buy and reimbursements for qualified adoption expenses.
Alimony payments are taxable to the person receiving the payments and deductible for the person paying the payments.
Life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you receive an annuity or IRA as a beneficiary, these amounts must be included in income. The penalty for early withdrawal is not applied to death benefits.
Gifts for 2012 must be more than $13,000 to be taxable. If you give a gift of $13,000 to someone there is neither taxable income nor a deduction for the gift.
Income you receive for a grant or scholarship is not taxable if the proceeds are applied to qualified education expenses. However, if the grant or scholarship is more than the education expenses listed on the 1098T, this amount is taxable.
Scholarship or grants used to pay room and board are taxable.
Non-cash income from bartering is taxable. Bartering is the exchange of property or services. Both parties must include the fair market value of goods or services as income on their tax return.
That tax refund from the state of Utah is taxable if you itemized your deductions the year before. If you did not itemize the refund does not need to be included as income.
The reason this is included as income when you itemize is that you deducted the full amount of state taxes taken out of your wages on your Schedule A, therefore receiving a deduction on your federal return. If, however, your state refunds some of that amount, it must be included back into income the next year.
For more information on taxable and nontaxable incomes go to
www.irs.gov and type taxable income into the search engine.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at tracystaxservice@yahoo.com.
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