Taxable and Non-taxable Income

If you’re trying to determine the difference between and , you should remember one basic fact: All not specifically excluded by law is taxable.

Basically, any money you receive in the form of work wages or tips is taxable. Additionally any income that you gain from property or services, whether cash or non-cash is also considered taxable. For example, if you exchange non-cash goods with another party, you both must include the market value of the items as income on your tax return.

The law excludes certain types of income from being taxed, such as:

. Usually these are not taxable if paid to you. However, if you cash out a life insurance policy, the amount received above the cost of the policy will be taxed.

Qualified . Normally, any income received from a scholarship isn’t taxable. The money you use for education costs like books and tuition isn’t taxed, however money used for room and board is.

Income from a Third Party Agency. Payments made to you from an agency may not be taxable if they fall into one of the following categories: Inheritance gifts, child support payments, welfare benefits, physical injury damage awards, cash rebates offered by a manufacturer of a product, reimbursement for expenses incurred through adoption.

If you received a refund from local or state taxes, it’s possible that the money may be taxable. A third party agency may provide a Form 1099-G either through the mail or electronically. You should use this form to report any taxable refunds you may have received. Even if you don’t receive the form, you are still required to report the income, so you should contact the agency to determine how to obtain the Form 1099-G.