insurance

Tax

What Income Is Nontaxable?

Most types of income are taxable, but some are not. Income can include money, property or services that you receive. Here are some examples of income that are usually not taxable:

  • Child support payments;
  • Gifts, bequests and inheritances;
  • Welfare benefits;
  • Damage awards for physical injury or sickness;
  • Cash rebates from a dealer or manufacturer for an item you buy; and
  • Reimbursements for qualified adoption expenses.

Some income is not taxable except under certain conditions. Examples include:

Life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.

Income you get from a qualified scholarship is normally not taxable. Amounts you use for certain costs, such as tuition and required course books, are not taxable. However, amounts used for room and board are taxable.

All income, such as wages and tips, is taxable unless the law specifically excludes it. This includes non-cash income from bartering, such as the exchange of property or services. Both parties must include the fair market value of goods or services received as income on their tax return.

If you received a refund, credit or offset of state or local income taxes in 2012, you may be required to report this amount. If you did not receive a 2012 Form 1099-G, check with the government agency that made the payments to you. That agency may have made the form available only in an electronic format. You will need to get instructions from the agency to retrieve this document. Report any taxable refund you received even if you did not receive Form 1099-G.

Questions? Give us a call. We’re happy to help!

Asset Protection Financial Planning

Financial Planning Dos & Don’ts

During times of economic turmoil, planning for your financial future can be a challenge. With that in mind here are some suggestions that offer you peace of mind and also simplify your life.

  • At least once a year, write down your investment goals and what strategies you will use to achieve them. Writing it down will help keep you focused.
  • Instead of giving money to several different charities, pick one or two that are important to you, and give a larger amount of money to each one. This type of directed giving not only makes more sense, but also makes it easier to track your donations at tax time.
  • Inventory your household possessions. the best way to do this is to make a list and then document your possessions using a camera or video camcorder. Keep your inventory in a safe place such as a safe-deposit box. An inventory will help you in the event you need to submit a claim to your insurance company.
  • Use one insurance agent and one financial advisor for your transactions.
  • If you have doubts about entering into a transaction, don’t do it. You will probably save yourself money, time, and aggravation.
Accounting Asset Protection Business Financial Planning

Financial Tips

Review Your Insurance Policies
You reviewed your “asset” policies in August. This month, review your life, health, and disability insurance policies. Check with your employee benefits office as to what programs are available. Make certain you have adequate coverage. Call us to determine the appropriate amounts for your age and income.

Lower Your Utility Costs
Review your utility costs for the year. Make certain you are getting the best possible deal where multiple providers are available. For example, obtain competitive quotes for long-distance phone service. For other utilities, review your usage to see if any savings are available. Consider the use of annual “budget” plans with the utilities to even out annual payments.

Analyze Budget vs Actuals
Compare August income and expenditures with your budget. Make adjustments as appropriate to your September expenditures. Make sure you have invested your planned savings amount for August.

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