Who isn’t looking for tax-free income? Right? Well believe it or not, there really are some types of income that just may be tax-free. Here is a list of some common tax-free income sources.
* Refunds. Technically you’ve already accounted for this income. Federal refunds as well as most state refunds are tax-free.
* Gains from home sales. The gains on the sale of a qualified primary residence is not taxable up to $250,000 for a single person or $500,000 for married filing jointly.
* Rental income. Some homeowner make extra income by renting out there residence during a big sporting event, like the Super Bowl or their lake cottage during the times they are not using it. You do not have to report income if you rent your home or lake cottage for up-to 14 days.
* Roth IRA earnings. Your earnings in a Roth IRA are not taxed when you meet the retirement account rules,
* Gifts. If you receive a monetary gift it is not taxable to you. Nor is it taxable to the person that gives the gift as long as it does not exceed $14,000 from one person, in one year.
* Child support. Income you receive as child support is not deemed to be taxable income. However, alimony received is considered taxable income.
* Your child’s income. Up to the standard deduction amount ($6,350 in 2017) in earned income (wages) and $1,050 in unearned income (interest) for children is not taxed. Excess earnings above these amounts could be taxed and $2,100 in unearned income is taxed at the parent’s higher tax rate.
* Scholarships/fellowships. Money received to cover tuition, fees, and books for degree candidates is generally not taxable.
At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at (260)-497-9761 to schedule an appointment with our advisors.