For the most part, it\u2019s safe to assume that all income is taxable. However this is only true until the tax law says it is. Income that is taxable is usually defined as any income you have received during the year, like wages and tips. It can also include income made in non-cash form like property or services. All parties who take part in a non-cash exchange must include the fair market value of any goods or services received on their tax return.<\/p>\n
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Below is a list of income types that are not taxable:<\/strong><\/p>\n <\/p>\n \u2022 Gifts and inheritances (under a certain amount)<\/p>\n \u2022 Child support payments<\/p>\n \u2022 Welfare benefits<\/p>\n \u2022 Damage aware for physical injury and sickness<\/p>\n \u2022 Cash rebates for an item bought either from dealer or manufacturer<\/p>\n \u2022 Reimbursements for qualified adoption expenses<\/p>\n <\/p>\n There is also income that is not taxable except under certain conditions, like:<\/strong><\/p>\n <\/p>\n \u2022 Life insurance proceeds paid to the taxpayer are usually not taxable, but if an insurance policy is redeemed for cash at any amount over the cost of the policy, then it is taxable.<\/p>\n \u2022 Income from qualifying scholarships is usually not taxable. Any amount used for tuition and books are not taxable, but the amount used for room and board is.<\/p>\n \u2022 A state and local income tax refund, the amount received may be taxable. All taxpayers should\u2019ve received a 2017 Form 1099-G from the agency that made the payment. If the form was not sent by mail, the form might have be delivered electronically. The agency may have to be contacted to find out where to get the form. It\u2019s important to report any taxable refund you received, if you cannot get Form 1099-G.<\/p>\n <\/p>\n Tips earned on the job from customers are subject to taxes. These are some important things to keep in mind when receiving these tips:<\/p>\n <\/p>\n \u2022 Tips are taxable.<\/strong> Federal income taxes must be paid on tips you received. Non-cash tips are also taxable for their value, such as tickets or passes.<\/p>\n \u2022 All tips must be included on the income tax return.<\/strong> The sum total of all tips earned during the year must be included in the return. That includes tips that come directly from customers, tips added to credit cards and any tips received under a tip-splitting agreement with co-workers.<\/p>\n \u2022 Tips must be reported to employer.<\/strong> If more than $20 worth in tips is made in a month, from any job, it must be reported to the employer. The report should only include any cash, credit and debit card tips made. Employers are required to withhold federal income, social security and Medicare taxes on reported tips. Non-cash tips do not have to be reported to employers.<\/p>\n \u2022 Keep a record of tips.<\/strong> The IRS provides a form to keep track of daily tips called the Employee\u2019s Daily Record of Tips and Report to Employer.<\/em><\/a><\/p>\n <\/p>\n Bartered income is taxable. Trading of a product or service for another is something small businesses sometimes do to get a product or service they need. Typically, there is no cash exchange.<\/p>\n <\/p>\n If bartering has taken, the value of products or services could be taxable. Here\u2019s what to keep in mind:<\/p>\n <\/p>\n \u2022 Barter exchange is a system of exchange.<\/strong> Some exchanges are made out of an office or over the Internet. Barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.<\/em><\/a><\/p>\n \u2022 Barter and trade dollars are the same as real dollars for tax purposes<\/strong> and must be reported on the return. Both parties must report the fair market value of the product or service they get.<\/p>\n \u2022 Bartering is taxable for the year in which the exchange took place.<\/strong> Tax rules may vary based on the type of exchange. Barterers may have to pay income, self-employment, employment or excise taxes on the barter income earned.<\/p>\n