Accountants in Miami Reveal Nontaxable Income Sources – Income is gained in many ways, from traditional bi-weekly salaries to commissions, interest, inheritance and more. While most of it is taxable, it’s important you know all about the nontaxable income sources so you can decrease your tax liability. In this blog, your accountants in Miami list non-taxed sources of income and some of the circumstances that must exist in order for the income to remain in that category.
Gifts of up to $15,000 are nontaxable income sources
In the eyes of the IRS, a gift is defined as any transfer where full consideration (measured in money or worth) is not received in return. As of this year, people can gift up to $15,000 per year without it being taxed. Your accountants in Miami remind you that there are other nontaxable income sources that come in a way of a gift, such as tuition or a paid medical expense from someone else. Political donations as well gifts to a spouse are also considered nontaxable income sources. Don’t forget though, a prize such as winning the lottery is not considered as nontaxable income.
Life insurance is not taxable
When a loved one passes away and leaves their family with life insurance benefits, that income is not taxable. However if the family cashes out the policy, that income (received through cashing out) is taxable. While still on the topic of insurance, when it comes to disability insurance payments, if it’s purchased privately on your own with after-tax dollars, any benefits are considered a nontaxable source on income.
For federal tax purposes, inheritance is a nontaxable source of income whether it’s inherited in the form of cash, investments or property. However, your accountants in Miami remind you that the earnings you make on those inherited assets are taxable. Some people decide to put inheritance into a trust in order to bypass probate, saving on the associated expenses.
No state income tax or corporate income
If like your accountants in Miami , you live in Florida then income is not taxed at state level. At the federal level, income is taxable everywhere but seven states don’t levy a state income tax on residents. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming don’t have state income tax.
Employer-assisted tax-free benefits and childcare
If your employer helps you with your education, you can get up to $5,250 from your income tax-free. If your employer helps you cover adoption fees, you’re allowed up to $13,570 tax free per child. If a couple is divorced, support payments are considered a nontaxable income source, the same goes for foster parent payments.
If you need help to determine whether you’re entitled to big savings through nontaxable income source, contact your accountants in Miami. We operate out accounting offices in Miami Beach as well as with clients nationwide thanks to virtual accounting. Please call 305.868.7620 for more on nontaxable income source.