Wednesday, January 3, 2007

NON-TAXABLE INCOME*








Not every dollar you receive is taxable. Some things are obviously not income; for example, money you receive to repay a loan you made to someone. Others are a little less obvious.

NON-TAXABLE INCOME:
Here are some of the more common items:
Amounts received for child care are nontaxable but alimony is taxed.
Gifts are not taxable to the recipient.
Inheritances are not taxable to the recipient.
Municipal bond interest is not taxable, but is to be reported on lin 8b, Form 1040.
Disability payments from a policy you purchased.
VA disability pensions
Child care payments made by your employer (with limitations)
Part or all income EARNED working abroad may be excluded.
Gambling winnings are taxable, but gambling losses, not to exceed gains, are deductible on Schedule A.
Cancelled debts are sometimes exempt, sometimes taxable.
Some employer-paid benefits are nontaxable subject to various rules.


REFERENCES –KEY ITEMS:
WHERE TO FILE: http://www.irs.gov/file/index.html
RESTORED DEDUCIONS for Sales Tax
http://www.irs.gov//pub/irs-pdf/p600.pdf

OTHER FORMS AND PUBLICATIONS:
Car Expense-- Pub 334,463,535 (See link below)
Sale of Principal Residence-- Pubs 523 and IRC § 121
Sec 179 write-offs for SUVs and other equipment-- Form 4562, Pub 946, IRC §167
Office in Home--- Form 8829, Pub 587
Mutual Fund -- phantom profits, reinvested dividends:-- Pub 550 and 564
Alternative Minimum Tax --- Pub 929 (individuals) Pub 542 (corporations)
Link to IRS forms and publications:http://www.irs.gov/formspubs/index.html
Link to IRS Section No. http://www.taxalmanac.org/index.php/Internal_Revenue_Code
To subscribe to IRS Newswire http://www.irs.gov/newsroom/content/0,,id=103381,00.html
=>SEE ARCHIVES FOR December (81 blogs) ==>

Link to IRS forms and publications:
http://www.irs.gov/formspubs/index.html
TO CONTACT ME OR SUBSCRIBE TO THIS BLOG:
Email me at taxxcpa2007@hotmail.com

TO SUBSCRIBE:
RSS:


Subscribe in NewsGator Online
Subscribe with Bloglines
Add to My Yahoo!
Add to Google
Add to My AOL

This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.





















2 comments:

Jim Howard said...

Some parts of some lawsuit awards are non-taxable, other parts are taxable.

Further complicating law suit awards is the practice of many lawyers of sending 1099s out for awards, with no indication of what the aware is for.

An even more confusing problem I've run into is a client who gets a 1099 for an award to a person who died after the award was ordered, but before it was paid.

In all cases the client has little or no notion of the specifics of the court order granting the award.

taxxcpa said...

Jim Howard makes a good point. Some lawsuit awards are taxable and some are not. If they are taxable, then, unless laws have changed since I last encountered that type situation, the plantiff's legal fees must be taken as a miscellaneous deduction subject to the 2% of AGI reduction--which means NO DEDUCTION unless you itemize your deductions.