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February 05, 2010

Taxable vs Nontaxable Income

Examples of items that are not included in your income are as follows:

• Adoption expense reimbursements
• Child support payments
• Gifts, bequests and inheritances
• Workers'compensation benefits
• Meals and lodging for the convenience of your employer
• Compensatory damages awarded for physical injury or physical sickness
• Welfare benefits
• Cash rebates from a dealer or manufacturer

Some income may be taxable in some circumstances but not taxable in other situations. If you surrender a life insurance policy for cash you must include in income any proceeds that are more than the cost of the insurance policy. Life insurance proceeds which are paid to you because of the insured person's death are not taxable.

If you are a candidate for a degree then scholarship or fellowship grants are not taxable. Amounts used for room and board are taxable.

Taxable income may be in a form other than cash. An exchange of property or services is taxable at the fair market value of the goods and services exchanged.