Taxable and Nontaxable Income (ASL) - YouTube video text script
Hi, I’m Maria and I work for the IRS.
As you know, most income is taxable and must be reported on your federal income tax return.
But what you may not know is that some income is only partially taxable or not taxed at all.
For example, child support payments, gifts, inheritances and welfare benefits you receive are usually tax-free.
On the other hand, income may be taxed in some situations, but not in others.
For example, Social Security benefits are usually tax-free, unless your income is above certain levels.
In that case, you pay tax on part of your benefits.
Court awards or settlements you receive for personal injury or sickness are normally tax-free.
But punitive damages or compensation for lost wages are usually taxable.
Money you take out of a traditional IRA is generally taxable.
But money you take out of a Roth IRA is usually tax-free.
But remember, income such as wages, salaries, tips and bartering income is taxable.
To learn more about taxable and nontaxable income, download Publication 525 from our website at IRS.gov.