Guest Author - Kate Woods
Many, many times throughout the year someone asks me if income that they received is considered taxable for federal income tax purposes. Here are a few of the items that are commonly mentioned followed by the question Is It Taxable?
Cash Received in Business Transactions When a payment is received in a business scenario in cash, many people think that because it seems to be untraceable that it does not have to be claimed as taxable income. Cash is considered taxable income and should be posted the same as credit card payments and payments by check or money order, etc.
Life Insurance Proceeds Policy Cash Surrender If you surrender a life insurance policy and receive the cash value the amount that is greater than the cost of the life insurance policy is taxable income.
Life Insurance Proceeds Due to Insureds Death The proceeds from a life insurance policy due to the death of the insured are not considered taxable income unless the policy was turned over to you for a price.
Barter Proceeds Trade of Goods and Services is a taxable event. The fair market value of the goods or services traded should be picked up as taxable income by each person involved in the barter transaction.
Gambling Winnings are taxable. You may deduct your gambling losses up to the amount of your winnings as a miscellaneous deduction if you itemize deductions.
Jury Duty - payments received are taxable.
Child Support - is not taxable but should not be confused with Alimony received which is taxable.
Gifts - are not taxable to the recipient.
Cash Rebates from dealers or manufacturers are not taxable.
Unemployment is taxable.
Welfare benefits are not taxable.
Workers Compensation benefits are not taxable.
Social Security How much of your social security benefits are taxable is dependent on both your total income and your marital status.
Keep in mind that if you invest any of the non-taxable amounts received that the earnings on the investments are taxable.
This list is not by any means all-inclusive but are items commonly asked about with regard to taxability.
As always I hope you are enjoying Tax Facts on the Taxing Subject of Taxes!
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