Taxable vs. Nontaxable

Question 1

Prizes and Awards

Answer 1

Taxable

Question 2

Personal (Physical) Injury or Illness Award

Answer 2

Nontaxble

Question 3

Taxable or Nontaxable?

Employee Adoption Assistance Program

Answer 3

Nontaxable; up to $16,810

Question 4

Casualty/Theft Loss attributed to federal disaster

Answer 4

Taxable in excess of $100 floor and 10% of AGI

Question 5

Self-employed health insurance

Answer 5

Taxable

Question 6

Taxable or Nontaxable?

Nonqualified Roth IRA Distribution

Answer 6

Nontaxable (Principal earning)
Taxable (Earnings)

Question 7

Workers’ Compensation

Answer 7

Nontaxable

Question 8

Charitable Contributions

Answer 8

Taxable

Question 9

Gifts and Inheritances

Answer 9

Nontaxable

Question 10

Taxable or Nontaxable?

Child Support

Answer 10

Nontaxable

Question 11

Distibutions to Partners and Shareholders

Answer 11

Nontaxable

Question 12

Taxable or Nontaxable?

Dividend Income

Answer 12

Taxable depending on company’s earnings and profits
For example, if there are no earnings and profits and taxpayer has basis in stock, it is nontaxable

Question 13

Taxable or Nontaxable?

Qualified Roth IRA Distribution

Answer 13

Nontaxable (Principal earning)
Nontaxable (Earnings)

Question 14

Wages

Answer 14

Taxable

Question 15

Taxable or Nontaxable?

Taxpayer lives longer after the expected life of the annuity.

Answer 15

Taxable

Question 16

Student Loan Interest

Answer 16

Taxable

Question 17

Taxable or Nontaxable?

Interest Income from state and local goverment bonds/obligations, bonds of a U.S. Possession, U.S. Series EE Savings Bonds

Answer 17

Nontaxable

Question 18

State/local taxes
(Property and either income or sales)

Answer 18

Taxable, up to $10,000

Question 19

Medical Expenses

Answer 19

Taxable in excess of 7.5% AGI

Question 20

Punitive Damages

Answer 20

Taxable

Question 21

Taxable or Nontaxable?

Return of Capital

Answer 21

Nontaxable

Question 22

What is the difference between taxable versus nontaxable?

Answer 22

Taxable refers to the portion of income that is subject to tax and nontaxable refers to the portion of income that is not subject to tax

Question 23

Interest Expense (home and investment)

Answer 23

Taxable

Question 24

Earnings (e.g. pension and annuity)

Answer 24

Taxable, depending on fixed period or life annuity

In addition earnings are taxed at ordinary income

Question 25

# Taxable or Nontaxable? Employer Payment of Employees's Educational Expenses

Answer 25

Nontaxable; up to $5,250

Question 26

# Taxable or Nontaxable? Capital Gain/Loss

Answer 26

Taxable

Question 27

# Taxable or Nontaxable? Qualified Non-Roth Retirement Plans

Answer 27

Nontaxable for the most part, however, benefits recieved in the year which the amount was distributed or made available to employee are taxable as ordinary income

Question 28

Social Security Income

Answer 28

Taxable depending on AGI 50-85%

Question 29

# Taxable or Nontaxable? Property Settlement

Answer 29

Nontaxable

Question 30

# Taxable or Nontaxable? Forfeited Interest (Penalty on Withdrawal from Savings)

Answer 30

Taxable

Question 31

Income tax from net business income

Answer 31

Taxable

Question 32

# Taxable or Nontaxable? Transit Passes

Answer 32

Nontaxable

Question 33

K-1 Flow-Through Income/Loss

Answer 33

Taxabale

Question 34

Gambling Winnings and Losses

Answer 34

Taxable

Question 35

Self-employed retirement

Answer 35

Taxable

Question 36

Unemployment Compensation

Answer 36

Taxable

Question 37

Life Insurance Proceeds

Answer 37

Nontaxable

Question 38

# Taxable or Nontaxable? Qualified Employee Discounts

Answer 38

Nontaxable

Question 39

# Taxable or Nontaxable? State and local tax refunds if itemized in prior year

Answer 39

Taxable

Question 40

Rental Income/Loss

Answer 40

Taxable

Question 41

# Taxable or Nontaxable? Stock Dividend

Answer 41

Nontaxable; unless there is the option for cash or property

Question 42

# Taxable or Nontaxable? Property Settlements

Answer 42

Nontaxable

Question 43

# Taxable or Nontaxable? De Minimis Fringe Benefit

Answer 43

Nontaxable

Question 44

Foreign-Earning Income

Answer 44

Nontaxable

Question 46

Medicare Benefits

Answer 46

Nontaxable

Question 47

# Taxable or Nontaxable? Employer-Provided Parking

Answer 47

Nontaxable

Question 48

# Taxable or Nontaxable? Life Insurance Coverage

Answer 48

Nontaxable

Question 49

# Taxable or Nontaxable? Interest Income from federal bonds, industrial development bonds, corporate bonds, part of the proceeds from an installment sale, interest paid by federal or state government for late payment of a tax, and gifts given by a bank for opening a bank account

Answer 49

Taxable

Question 50

Return on Investment (i.e. your contributions)

Answer 50

Nontaxable

Question 51

# Taxable or Nontaxable? Alimony/Spousal Support Payments

Answer 51

Taxable, if divorce or separation agreement executed on or before Dec. 31, 2018 Nontaxable, if divorce or separation agreement executed after Dec. 31, 2018

Question 52

# Taxable or Nontaxable? Nondeductible Tradtional IRA Distribution

Answer 52

Nontaxable (Principal earning) Taxable (Earnings)

Question 53

Accident Insurance: Premiums paid by taxpayer

Answer 53

Nontaxable

Question 54

# Taxable or Nontaxable? Deductible Traditional IRA Distribution

Answer 54

Taxable (Principle and Earnings)

Question 55

Moving Expenses

Answer 55

Taxable only for members of the armed forces moving due to military order

Question 56

Scholarships and Fellowships

Answer 56

Taxable

Question 57

# Taxable or Nontaxable? Dependent Care Assistance

Answer 57

Nontaxable; up to $5,000

Question 58

# Taxable or Nontaxable? Flexible Spending Arrangements (FSA)

Answer 58

Nontaxable

Question 59

# Taxable or Nontaxable? Meals and Lodging

Answer 59

Nontaxable, unless lodging must be required as a condition of employment

Question 60

Guaranteed Payments to Partners

Answer 60

Taxable

Question 61

# Taxable or Nontaxable? Qualified Tuition Reduction

Answer 61

Nontaxable

Question 62

# Taxable or Nontaxable? Stock Split

Answer 62

Nontaxable ## Footnote Allocate original basis over new shares held (i.e. Total Basis / Adjusted Shares)

Question 63

# Taxable or Nontaxable? Life Insurance Dividend

Answer 63

Nontaxable

Question 64

Self-employment tax from net business income

Answer 64

Taxable

Question 65

# Taxable or Nontaxable? State and local tax refunds if standard deduction was used in prior year

Answer 65

Nontaxable

Question 66

Tuition Reductions

Answer 66

Taxable ## Footnote only included in taxes if it's their only compensation

Question 67

Cancellation of Debt (COD)

Answer 67

Taxable

Question 68

Hobby Income

Answer 68

Taxable

Question 69

Merchandise Discount

Answer 69

Nontaxable

Question 70

Service Discount

Answer 70

Nontaxable; limited to 20%

Question 71

Employer Provided Parking

Answer 71

Nontaxable; limitied to $315

Question 72

Transit Passes

Answer 72

Nontaxable; limited to $315

Question 73

What are the three tax-exempt interest income that must be reported, but excluded from gross income?

Answer 73

1. State and Local Government Bonds/Obligations 2. Bonds of a U.S. Possession 3. U.S. Series EE Savings Bonds