Did you know anyone paid for babysitting has to report that income to the IRS? Or let’s say you and a neighbor want to trade cars, you’ll still have to pay taxes on what the fair market value of the car you bartered. But not all income is taxable. Here are some examples of income you don’t have to pay taxes on:
- Rebates from manufacturers
- Gifts that are not more than the annual exclusion rate
- Inheritances
- Child support paid to you
- Damages payouts
- Frequent flyer miles you earned from business trips and then used for personal trips
There are other types of income that are tax-free under certain conditions. Here is a look at those:
- Reimbursements for qualified adoptions
- Selling items on Craigslist is taxable income. But if you make it a charity tag sale where 100% of the sales goes towards charity, it’s nontaxable.
- You don’t have to pay taxes on life insurance proceeds paid to you as the result of someone’s death but, you do have to pay taxes when you cash in a life insurance policy.
The IRS recommends that when you make these types of deductions, you use CPA or Enrolled Agent. We’re always more than happy to help you find ways to keep more of your money at tax time as well as giving advice throughout the year for tax strategies.
Important: ALL income has to be reported. Even if it is income that is nontaxable.
Give us a call today to start saving your taxes.
Image courtesy of Philip Taylor PT on flickr; reproduced under Creative Commons 2.0