Taxes Q&A: Understanding What Is And Is Not Taxable

Taxes Q&A: Understanding What Is And Is Not Taxable
Taxes Q&A: Understanding What Is And Is Not Taxable

Is Social Security retirement income taxable?

Up to 85% of your Social Security retirement benefits may be taxable, although it depends on your total income and civil status. Federal law states that an individual must pay taxes if you have annual Social Security retirement income of more than $25,000. If you are married, you must pay such taxes if your combined income is more than $32,000. (https://www.ssa.gov/planners/taxes.html)

However, if the Social Security retirement benefit is the recipient’s only source of income, then it is rendered to be non-taxable and there may be no need to file a federal income tax return.

Are other pension payments (not SS) taxable?

Just like Social Security benefit payments, other pension payments are taxable, although it is dependent on the recipient’s income and marital status. If such payment is only his source of income, then it may be tax-free. Other conditions are also stipulated on the Instruction Booklet of the Internal Revenue Services (IRS). (https://www.irs.gov/taxtopics/tc410.html)

Is child support taxable?

Child support is not taxable. This is neither deductible by the payer, nor taxable to the payee. The Internal Revenue Services (IRS) stipulates that child support payments are not included in taxable income. Thus, it is not included in filing a tax return. (https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/interest-dividends-other-types-of-income/alimony-child-support-court-awards-damages/alimony-child-support-court-awards-damages-1)

Are gifts taxable?

Gifts may be taxable. It depends on the amount of the gift to be given. For instance, there is an annual cash gift exclusion if the gift was less than $14,000.00 (in 2017 https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes).

There are also stipulations in the law that allow you to give certain amounts, whether in cash or property, which do not have gift tax consequences. Gifts to charities or raffle draw winners have a corresponding deductible tax depending on the cash gift that they have received.

Do you have a Federal Tax Issue? The Neighborhood Christian Legal Clinic – Low Income Taxpayer Clinic can consult with you to provide advice regarding your IRS tax issues, and/or potentially act on your behalf for FREE if you qualify for assistance (come to a clinic intake session)!

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Jim Floyd is the Staff Enrolled Agent at the Neighborhood Christian Legal Clinic – Low Income Taxpayer Clinic.

As an Enrolled Agent, Jim is a federally-licensed tax practitioner with unlimited rights to represent clients before the Internal Revenue Service. This means he is unrestricted as to which taxpayers he can represent, what types of tax matters he can handle, and which IRS offices he can represent clients before. Enrolled agent status is the highest credential the IRS awards.

To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits, and adhere to a stringent code of ethics.

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