Useful Cheatsheets
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Taxable and Non-Taxable Income

Sort your income into what the IRS taxes, what it does not, and what it taxes only in part.

TL;DR

  1. Assume income is taxable unless a specific rule says it is not.
  2. Leave out true taxFree income like gifts, child support, and inheritances.
  3. Check partlyTaxable items like Social Security and scholarships each year.
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Taxable Income

    Wages and Tips

    Pay from a job, including bonuses, commissions, and tips.

    Reported on your W-2
    Side and Gig Income

    Freelance, rideshare, and resale profits are all taxable.

    Taxable with or without a 1099
    Investment Income

    Interest, dividends, and gains when you sell for a profit.

    1099-INT, 1099-DIV, 1099-B
    Unemployment Benefits

    Jobless benefits count as income on your federal return.

    Reported on Form 1099-G
    Gambling Winnings

    Lottery, casino, and sports betting wins are all reportable.

    Losses only offset if you itemize

Tax-Free Income

    Gifts and Inheritances

    Money or property you receive as a gift or bequest.

    Receiver owes no income tax
    Life Insurance Payouts

    Death benefits paid to a beneficiary are generally tax-free.

    Lump-sum payout = not income
    Child Support

    Support payments are not income for the parent receiving them.

    Not reported on your return
    Municipal Bond Interest

    Interest on state and city bonds skips federal income tax.

    Federal tax-free, state may vary

Partly Taxable Income

    Social Security

    Up to 85% of benefits can be taxed as income rises.

    0%, 50%, or 85% taxable
    Scholarships

    Money for tuition and books is tax-free; room and board is not.

    Tuition = free, housing = taxed
    Home Sale Profit

    Most gain on a main home you lived in 2 of 5 years is excluded.

    $250,000 single / $500,000 joint
    Employer Perks

    Some benefits are tax-free only up to a limit.

    Tuition aid: first $5,250 tax-free

Build Tax-Free Income

    Roth IRA

    Pay tax now; qualified withdrawals in retirement are tax-free.

    Age 59 1/2 + 5 years = tax-free
    HSA

    Deductible going in, tax-free coming out for medical costs.

    In, growth, out: all tax-free
    529 Plan

    Growth is tax-free when spent on qualified education costs.

    Tuition, books, some K-12 costs
    Employer Health Plan

    Premiums your employer pays are never added to your wages.

    Employer-paid premiums = not income

Tips

  1. Report side and gig income even without a 1099; the form is a courtesy, and the tax is owed either way.
  2. Build future tax-free income with a RothIRA or HSA now, since qualified withdrawals later never hit your return.

Warnings

  1. Do not treat a large gift from family as income; the receiver owes nothing, and any paperwork falls on the giver.
  2. Watch your W-2 for taxable perks like groupTermLife coverage above $50,000, which your employer adds to your wages.

In Practice

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