Is your income taxable?
As you sit down to prepare your 2013 tax return or gather data to send to your accountant, you may be wondering whether all your income must be declared. Perhaps you received some unusual income (money you don’t get every year) or you won a large tangible prize and you’re not sure about it.The truth is, almost all income is taxable (even the $13 interest on your savings account), whether it comes in the form of money, goods, or services. If you enter into a barter exchange no cash will change hands, but both parties must declare the fair market value of the goods or services received. If you receive royalty income, it’s taxable.The truth is, income, whether cash or non-cash, is taxable unless the government specifically excludes it. Some things you don’t need to pay tax on include:
- Inheritance income
- Gifts (although the giver may need to pay gift tax if the value of the gift is more than $14,000)
- Life insurance proceeds paid upon the death of the holder. (If you redeem your own policy for cash, any amount above the cost is taxable)
- Child support payments
- Welfare benefits
- Damage awards for injury or illness
- Cash rebates on purchased items
- Reimbursements for qualified adoption expenses
This list is just a brief, simplified overview and doesn’t attempt to address everything that may or may not be taxable. As you know, simplicity is not the byword of the tax code. The IRS publishes a 40-page booklet, Publication 525, addressing these items and others in more detail.If you agree with Patrick & Robinson CPAs that we’d all be better off with a simpler tax code, we encourage you to download our birthday card commemorating the 100th anniversary of a continuous income tax, add your own notes, and mail the card to your Member of Congress.If you need tax or accounting services from professionals you can depend on to know the tax code, Patrick & Robinson CPAs holds a long history of serving clients in the Jacksonvillearea. Please contact us at Office@CPAsite.com or 904-396-5400.
