Wouldn’t it be nice to have a source of non-taxable income? You may be luckier than you think. Here are some types of income that the tax administration does not tax.
1. non-taxable interest. The federal government does not tax interest on municipal bonds. This includes bonds issued by the state or municipalities. The tax-free fee increases your income as much as possible, but care must be taken to ensure that the base municipality is not in poor financial condition.
2. Health insurance premiums. Most health insurance premiums are tax-free for now. That could change in the future to help pay for health care reform, but for most people, that benefit can currently be paid in dollars before taxes.
3. Income from Roth IRA and Roth 401 (k) accounts. Although the amounts paid into these pension savings accounts are taxed, any contribution earnings are exempt from federal income tax while holding periods and distribution rules are followed.
4. Health Savings Accounts (HSA). Contributions can be deducted, while earnings are tax-free as long as account payments are used to pay eligible health care costs.
5. Child assistance received. Income from child support you receive is exempt from federal tax.
6. Revenue from car pools. Although travel expenses cannot usually be deducted, reimbursement of travel expenses by travelers is not reported as income.
7. Profits from the sale of the house. Up to $ 250,000 ($ 500,000 for joint application) of capital gains on the sale of your principal residence may be tax-free.
8. Up to 14 days rental income. If you rent a home or holiday property, it can be tax-free for up to 14 days a year from this rental income.
9. Certain employer compensation. In addition to health care premiums, there are a number of non-taxable employee benefits. Everyone has limits, but every non-taxable dollar of money is in your pocket. These include:
-Airline miles earned on the cost of a business credit card
-Certain tuition costs provided by employees
-Qualified reimbursement of adoption costs
-Up to $ 50,000 term life insurance paid by the employer
– Flexible bills for subsistence and health care
-Business fees for travel to work and parking and travel in mass transit
Remember, when you pay something in dollars before taxes, it’s like raising yourself. Take advantage of as many tax-free income opportunities as possible.
James Angell is a certified public accountant based in Willits. His office is located at 461 S. Main St., and you can reach him at 459-4205.