Taxable/Nontaxable Income Taxpayers need to determine the difference between taxable and nontaxable income when filing their returns. Knowing how to report it properly helps reduce the tax liability. TAXABLE INCOME Wages, salaries, tips, bonuses, vacation pay, severance pay, commissions Interest and dividends Certain types of disability payments Unemployment compensation Jury pay and election worker pay Strike and lockout benefits Bank “gifts” for opening or adding to accounts if more than “nominal” value Cancellation of debt (unless excludable by law or regulation) Alimony Recoveries of items deducted in previous year Gains from sales of property, stocks and bonds, stock options, etc. Pensions and annuities distributions (amounts not contributed by taxpayer with after-tax dollars) Traditional IRA distributions (amounts deducted in prior years) Rental income, farm income, business income Royalties Trust/estate income, Partnership/S corporation income Executor’s commissions Social Security benefits (above the base amount) Notary fees Most court awards or damages Fees or property received for services or barter income Prizes, awards, gambling winnings, and illegal income Certain scholarships, fellowships and grants NONTAXABLE INCOME Gifts and most inheritances Life insurance proceeds Child support Certain veteran’s benefits Dividends on veteran’s life insurance loans Insurance reimbursement of medical expenses not previously deducted Welfare payments Compensatory damages for personal physical injury or physical illness Workers’ compensation Some qualified pension distributions for Public Safety Officers Liberty Tax professionals are available for your tax needs. Please call your local Liberty Tax office for further information.