By: Bryan S. Kerr, BSc, MA
MIAMI – Generally, most income you receive is considered taxable if that income is available to you, regardless of whether it is actually in your possession or not. There are situations when certain types of income are partially taxed or not taxed at all. Examples are as follows:
– Life Insurance If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds, which were paid to you because of the insured person’s death, are not taxable unless the policy was turned over to you for a price.
– Scholarship or Fellowship Grant If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.
– Non-cash Income Taxable income may be in a form other than cash. One example of this is bartering, which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.
Examples of Taxable Income include:
– Wages, salaries, other employee compensation including vacation pay, sick pay, and third party sick pay
– Compensation paid in goods, services, or property (Using Fair Market Value)
– Annuity distributions
– Income from jury duty
– Interest or dividend income
– Ordinary Gains
– Net profits from business and professions
– Income from LLC’s, Partnerships, Estate and trusts
– Farm net income
– Net profit from rental property
– Profit sharing and Bonuses
– Stipends
– Tip income
– Lottery winnings, and gambling winnings
– Welfare benefits
– Commissions & fees received
– Stock options
– Director fees,
Examples of Non Taxable Income include:
– Proceeds from Life Insurance
– Reimbursements for qualifying Adoption expenses
– Employee reimbursement of moving expense
– Alimony
– Inheritance, and bequests
– Death Benefits
– Child support payments
– Workers’ compensation benefits
– Meals and Lodging for the convenience of your employer
– Active Duty Military Pay
– Royalties from intangible property
– Patent or copyright income
– Housing allowance to clergy
– Welfare Benefits
– Cash Rebates from a dealer or manufacturer
Kerr & Kerr offers tax consultation and advice for individuals and all corporate returns – from the simplest corporation to controlled groups, SCorp, Partnerships, Estate and trusts, and tax exempt organizations. Bryan S. Kerr, BSc, MA of Kerr & Kerr LLC can be reached at office (305) 387-5880 or cell (305) 904-4720 and via email [email protected] visit them at kerrkerr.com
