what is non taxable income

what is non taxable income

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Non-taxable income is income that is not subject to taxes. It can be money or property you receive from various sources for which you are not required to pay income tax. Here are some examples of non-taxable income:

  • Gifts: Financial gifts, either money or other assets, from friends, family, or an employer are non-taxable income.

  • Child support: Child support payments are non-taxable income and should not be included when you file your taxes.

  • Disaster relief assistance: If you are a disaster victim and qualify for relief assistance payments or other types of compensation, they are usually non-taxable income.

  • Employer assistance: Certain accident and health plans offered by your employer are considered non-taxable income. Contributions to an Archer MSA or long-term care plan are not taxable. Employer contributions to a health spending account like an FSA, HRA, or HSA are non-taxable income. Qualified reimbursements from these accounts are also tax-free.

  • Foster care payments: Foster parents who care for children who have been placed in their home may receive government payments to help pay for expenses. These payments are usually considered non-taxable income.

  • Inheritances: Inheritances, gifts, and bequests are non-taxable income.

  • Life insurance death benefits: Life insurance death benefits are non-taxable income.

  • Scholarship and financial aid income: Scholarship and financial aid income is non-taxable income if it is used for qualified education expenses.

  • Unemployment pay: Unemployment pay is non-taxable income.

  • Veterans benefits: Veterans benefits, including disability compensation and pension payments, are non-taxable income.

Its important to note that not all types of income are non-taxable. For example, wages, salaries, commissions, rental income, royalty payments, stock options, dividends and interest, and self-employment income are taxable.

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