Tax Basics
taxes
Determining taxable income

Just what is taxable?

While it's true that some income items do escape IRS attention, for most of us there's not much the IRS doesn't consider taxable income. Of course, there are the standbys: salaries, wages, tips, commissions, interest and dividends, rental payments and all the money you made from that photography business on the side.

Bartering your services won't help, either. The value of noncash items must be determined and then counted as income. Putting your money in a foreign bank to earn interest won't cut your tax bill either. If it's in your name and you can get to it, it's considered income. Even that $50 bill you found at the bus stop counts.

And don't think for a minute you can get away with some underhanded ways to make a few extra bucks without paying up. The IRS says that embezzlement and swindling proceeds are taxable, too. The tax folks don't care if you steal it, as long as they get their piece of the action.

Taxable/Nontaxable Income
Items that add to your tax bill
  • Administrator and executor fees
  • Rent and deposits received as security from a tenant
  • Alimony
  • Some annuities
  • Awards, prizes and contest winnings
  • Back pay, including back pay for age and job discrimination
  • Bad debts recovered if previously deducted
  • Bonuses
  • Capital gains
  • Commissions
  • Proceeds from a condemnation award
  • Cost of living allowances
  • Credit protection insurance proceeds that exceed any premiums paid
  • Crop damage payments
  • Debts canceled
  • Director's fees
  • Disability, salary payments during
  • Discounts on interest received
  • Gambling, lottery, raffle, sweepstakes and other drawing winnings
  • Embezzlement proceeds, in the year of embezzlement
  • Exchanges of property
  • Executor's fees
  • Foreign income
  • Foster-care payments for adult care from charitable organizations
  • Found money
  • Fringe benefits
  • Independent contractor's income
  • Some insurance proceeds
  • Interest and dividends
  • Jury fees
  • Notary public fees
  • Patent, royalties, license receipts and any infringement compensation
  • Professional services, fees received for
  • Profit on sales between family members
  • Punitive damages
  • Raffle winnings
  • Rents
  • Royalties received by authors, musicians, inventors, lessors of property
  • Salaries
  • Sale of property
  • Severance pay
  • Strike benefits
  • Swindling proceeds
  • Tips
  • Trust income
  • Trustee fees
  • Unemployment benefits
  • Wages


Items that don't add to your tax bill
  • Accident and health insurance proceeds
  • "Black lung" benefits
  • Casualty insurance and other reimbursements
  • Child support payments
  • Compensatory damages awarded for physical injury or physical sickness
  • Federal Employees' Compensation Act payments
  • Housing allowance for members of the clergy
  • Interest on state or local obligations
  • Meals and lodging provided by employer
  • Military allowances
  • Moving expense reimbursements
  • Scholarship and fellowship grants
  • Supplemental Security Income (SSI)
  • Veterans' benefits
  • Welfare benefits
  • Workers' compensation

 

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