Taxable Income Non-taxable Income
a. Wages a. Disability insurance payments
- becomes taxable if the employer paid for the
premiums of the policy
- workers compensation payments are not
taxable
b. Salaries b. Employer provided insurance
c. Tips c. Health savings account (HSA)
- used for qualified healthcare expenses.
- any amount from a HSA to cover a qualified
expense, this receipt is not taxable
d. Interest d. Life insurance payments
- life insurance proceeds you receive as a
beneficiary is not included in G.I and not
reportable
- any interest received is taxable and should be
reported as interest received
e. Dividends e. Income earned in seven states (SoDAN
FTW)
1.South Dakota
2.Alaska
3.Nevada
4.Florida
5.Texas
6.Wyoming
7.Washington
f. IRA/401k distribution f. Sale of a principal residence
- individuals and married couples who owned
their home for at least two of the last
five years
- have lived in it as a principal residence for at
least two of the last five years
- can exclude from their income up to
$250,000 (for individuals)
or $500,000 (for married couples filing jointly)
of capital gains when they sell the home.
g. Pensions g. Financial gifts
- giver of the financial gift is the one being taxed
with gift tax if it’s over $15,000.
- Gifts from employers may also be subject to
fringe benefits.
- Gift to charities are non-taxable.
h. Annuities h. Inheritances
- not subject to income tax but may be subject to
estate tax
i. Municipal bond interest
- issued by states and other government entities
are tax free on federal, state and local level.
- investment in bonds are subject to federal and
state taxes.
j. Up to $3,000 of income offset by capital
losses
- if investments are sold at a loss, the loss can be
used to reduce the taxable income up to $3,000
per year. If the loss is in excess of the limit, the
excess can be carried over from year to year until
exhausted
k. Roth Retirement Account Income
- qualified retirement accounts.
Adjusted to Gross Income
- Some of the most prominent deductions made to reach an
individual’s adjusted gross income include
Certain retirement plan contributions, such as individual retirement accounts (IRA),
SIMPLE IRA, SEP IRA, and qualified plans
Half of the self-employment tax
Healthcare savings account (HSA) deductions
Alimony paid included in the recipient’s gross income
Moving expenses only if the taxpayer is an active-duty military moving due to military
orders starting 2018
Losses incurred from the sale or exchange of property
Early-withdrawal penalties levied by financial institutions
School tuition, fees, and student loan interest with exceptions and limits usually apply
Jury duty pay turned over to a filer’s employer
Some business-related expenses incurred by performing artists, teachers, fee-basis
government officials, and reservist.
Schedules
Schedule 1: Additional Income and Adjustments Additional Income:
to Income
Tax credits, taxable refunds, or other offsets
for state or local income taxes
Alimony you received.
Business income or loss (you’ll also need to
include Schedule C or Schedule C-EZ)
Capital gains or losses, like if you bought or
sold stocks.
Income from rental real estate
Royalties
Income from a business partnership, S-
corporation or trust (you’ll also need to
include Schedule E, Supplemental Income and
Loss)
Farm income or loss (you’ll also need to file
Schedule F)
Unemployment payments
Any other income, like gambling or prize
winnings, and you’ll need to specify the type
and amount
Adjustments to Income:
Educator expenses
Certain business expenses for performing
artists, fee-based government officials or
reservists
HSA contributions
Self-employment tax
Self-employment retirement plan
contributions, such as SEP IRAs or SIMPLE
IRAs
Health insurance if you’re self-employed
Early withdrawal penalty on savings
Alimony paid
Student loan interest
Certain other IRA contributions
Schedule 2: Tax Tax:
AMT Alternative min. tax
Excess advance premium tax credit
repayment
Schedule 3: Additional credits and payments Nonrefundable Credits:
Foreign tax credit
Credit for child and dependent care
Education credits
Retirement savings contribution credit
Residential energy credit
Schedule 4: Other Taxes Other taxes:
SE Tax
Unreported Social Security and Medicare
benefit
Addtl tax on IRAs, other qualified
retirement plan
Household employment taxes
Healthcare tax
Schedule 5: Other Payments and Refundable
Credits
Schedule 6: Foreign Address and Third-party During tax year 2018, if you needed to report a
Designee foreign address or appoint a third party designee
whom the IRS can speak with about your tax
return, you used Form 1040 Schedule 6 with your
return. Now, the IRS has discontinued this
schedule and moved this information directly
onto the new 1040 tax forms.
Schedule A: Itemized Deductions
Schedule B: Interest and Ordinary Dividends
Schedule C: Profit or Loss from Business
Schedule D: Capital Gains and Losses
Schedule E: Supplemental Income and Loss
Schedule F: Profit or Loss from Farming
