What types of income are NOT taxable?

Don’t overpay the IRS by including nontaxable income on your tax return.

The following income is generally NOT taxable income. There are always exceptions. For example, inheritances are generally not taxable, but if you inherited an IRA account, you will be taxed when you receive IRA distributions. But for most people, these types of income are NOT taxable: 

  1. Life insurance proceeds
  2. IRA and Pension rollovers
  3. Child support payments
  4. Inheritances
  5. Gifts
  6. Workers Compensation
  7. Disability payments if you paid the premiums on the policy. If your employer paid the policy, then the disability payments are taxable. If you paid part of the policy, then part of the disability payments you paid are nontaxable.
  8. Court damages for personal physical injuries or physical sickness. Punitive payments are taxable.
  9. Health and accident benefits
  10. Federal income tax refund
  11. State income tax refund (if you took the standard deduction last year)
  12. Most scholarships, fellowships, and Pell grants
  13. Foster care payments (certain restrictions for individuals over age 18 in foster care)
  14. Gain on the sale of your personal residence is usually nontaxable. The gain might be taxable if you lived in the residence less than two years or if the residence has ever been used as a rental property or home office
  15. Roth IRA qualified distributions
  16. Welfare payments
  17. Supplemental Security Income (SSI)
  18. Social security benefits are either nontaxable or partially taxable. Enter your social security benefits on the Social Security Benefits screen and we’ll calculate how much, if any, of your benefits are taxable
  19. Cancellation of debt because of bankruptcy or insolvency. Enter your 1099-C or 1099-A on the Canceled Debt screen and we’ll calculate how much, if any, of the canceled debt is taxable
  20. Veterans Administration disability benefits
  21. Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program
  22. Black lung benefits
  23. Cash rebates. For example, if you receive a cash rebate of $100 after you purchase a new washing machine
  24. Insurance proceeds for theft or damage to your property
  25. Utility rebates
  26. Long-term care insurance benefits
  27. Military allowances
  28. Peace Corps living allowances
  29. Reimbursement for medical care