Tax Tip of the Week
900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
For the week of
July 10, 2000
Not all the money you receive is taxable
The federal income tax laws are very complex. Just what is
subject to income tax and what is not? The full list is beyond the scope of this brief tax tip, but here are a
few of the more common items subject to tax and a list of some items which are not subject to federal income tax.
These items are includible in taxable income:
- Alimony or separate maintenance received
- Most awards
- Back pay
- Discounts from employers if in excess of gross profit on the item
- Most contest winnings
- Bonuses
- Found treasures (yes!)
- Christmas bonuses from employers, except for token gifts such as food items
- Commissions
- Most cancellations of debt
- Embezzled funds (The IRS is entitled to tax your illegal gains.)
- Prepayments for future services
- Gambling winnings (You can offset winnings with losses.)
- Income from hobbies
- State income tax refunds, if you took a deduction when the tax was paid
- Jury fees
- Most prizes
- Punitive damages received
- Tips
These items are NOT subject to federal income tax:
- Gifts and inheritances
- Interest on bonds of a city or state
- Car pool money (generally)
- Child support
- Physical injury awards
- Employer-paid group term life insurance premiums (up to $50,000 coverage)
- Life insurance proceeds
- Insurance proceeds for living expenses while home is being repaired
- Meals provided by employer on its premises for its convenience
- Employer-paid medical care reimbursements
- Rebates or discounts received by customers
Please keep in mind that this is only a partial list. If you
have questions about what is or is not taxable, please call us. You do not need to be a current client to contact
us. We are here to see that you pay no more tax than the law requires.
Please invite your friends to visit our Internet
site. We would welcome them as regular viewers.
Click here to view previous tax tips.
"Tax Tips" are published weekly to
provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders,
and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list
to receive other tax-cutting information from time to time, please contact our office. We're here to help.
