One fact to remember when trying to figure out the difference between taxable and non-taxable income is that not all income is specifically excluded by to be taxable.
Pretty much any tips or wages made from employment is considered taxable income. Also income gained from services and/or property, no matter if it is cash or not is taxable. For example, the exchange of goods between parties is required to be included in your tax filings with the fair market value of the items.
There are some types of incomes that are not taxed by law.
Life Insurance Payouts. Generally benefits paid from a life insurance policy are not taxable. Although if you decide to cash out your policy the cost of the policy is taxable.
Qualified Scholarships. Scholarship income normally is not taxable. The costs associated with education such as book and tuition is not taxed. Money used for rent and housing is taxable.
Third Party Income. Income from third party agencies may not be taxable if the benefits are paid from one of the follow: child support, welfare benefits, damages awards from physical injuries, rebates offered by product manufactures, gifts of inheritance and adoption costs.
It is possible that refunds from state or local taxes may be taxable. Third party agencies may provide Form 1099-G either electronically or via the mail. This form needs to be used to report any refunds that are taxable that you’re received. You are still required to report refund income even if you do not receive the form and should contact the agency that provided the refund to figure how to receive Form 1099-G
