CCH Federal Taxation

Accounting 553: Course Project

Student Name: Nidal Charafeddine
Professor: Hany Faltas
Devry University
August-2016

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Inclusions in Gross Income

1. Agreement not to Compete

In contract law, a non-compete clause (often NCC), or covenant not to compete (CNC), is
a clause under which one party (usually an employee) agrees not to enter into or start a
similar profession or trade in competition against another party (usually the employer).

2. Gambling Winnings
If your winnings are reported on a Form W-2G, federal taxes are withheld at a flat rate of
25%. If you didn't give the payer your tax ID number, the withholding rate is 28%.
Withholding is required when the winnings, minus the bet, are: More than$5,000.

3. Alimony
Amounts paid under divorce or separate maintenance decrees or written separation
agreements entered into between you and your spouse or former spouse are
considered alimony for federal tax purposes if: You and your spouse or former spouse do
not file a joint return with each other.

4. Hobby Income
You must report on your tax return the income you earn from a hobby. The rules for how
you report the income and expenses depend on whether the activity is a hobby or a
business. There are special rules and limits for deductions you can claim for a hobby.

5. Annuity
An annuity is a series of payments under a contract made at regular intervals over a
period of more than one full year. They can be either fixed (under which you receive a
definite amount) or variable (not fixed). You can buy the contract alone or with the help
of your employer.

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6. Illegal Transactions:
Income from illegal activities, such as money from dealing illegal drugs, must be
included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ
(Form 1040) if from your self-employment activity.

7.

(gains from gambling, betting, Lotteries, embezzlement, protection money, etc.):

Although this type of income is illegal, it still counts as income and the IRS
considers it fully taxable.

8. Awards:
Bonuses or awards you receive for outstanding work are included in your income
and should be shown on your Form W-2. These include prizes such as vacation trips for
meeting sales goals. If the prize or award you receive is goods or services, you must
include the fair market value of the goods or services in your income. However, if your
employer merely promises to pay you a bonus or award at some future time, it is not
taxable until you receive it or it is made available to you.

9. Insiders Profits:
Insider profit comes from stock trading that is influence from prior knowledge of
events before these become public and so influence market behavior. Insider trading is
illegal when done by outsiders who improperly gain and exploit internal company
information. Directors and executives also do insider trading legally when they sell
their shares based on their intimate knowledge of company status. Whatever legal or
illegal income derived from insider trading is included in gross income. However if
trading meets the threshold for being considered a for profit activity or activity for the
production of income then expenses related to the investment is deductible as an
itemized deduction from AGI. These expenses must be incurred for the production of
income, for the maintenance, conservation and management have property used in the
production of income or for the purposes of calculating tax obligation and/or refund.
Annual Investment interest is deductible but restricted to net investment income.

10. Back Pay:

years

This is the amount of money someone receives for being employed during tax

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11. Interest:
Taxable interest includes interest you receive from bank accounts, loans you make
to others, and other sources.

12. Bad Debt Recoveries:

The tax treatment for bad debt depends on whether the debt is personal or
business related. A business bad debt is deductible in the year in which it is becomes
partially or fully worthless, while a personal bad debt is only deductible in the year when
it becomes totally worthless. A business bad debt is deducted for AGI while a personal
bad debt is treated as a short-term capital loss. Monies given to a business in exchange
bonds and debenture or buy shareholders to pay corporate debt are not considered debt
but investment. Cash basis taxpayers can only deducted debts if actual cash is loss. The
specific charge off method is used for all personal bad debts and most business bad
debts. Only small banks and thrift institution is allowed the reserve method.
13. If a debt previously treated as bad is later recovered, the recovered amount is entered
into gross income.

14. Jury Duty Fees:

Jury duty pay you receive must be included in your income on Form 1040, line
21. If you gave any of your jury duty pay to your employer because your employer
continued to pay you while you served jury duty, include the amount you gave your
employer as an income adjustment on Form 1040

15. Bargain Purchase from Employer:

A bargain purchase consists of financial assets acquired for less than fair market
value. In a bargain purchase business combination, another acquires a corporate entity
for an amount that is less than the fair market value of its net assets.

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16. Kickbacks:
This is used in a form of bribery. Commission gets paid to the bribe taker and gets
in exchange services. For example, it could be money or goods. You must include
kickbacks, side commissions, push money, or similar payments you receive in your
income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if
from your self-employment activity.

17. Bonuses:
Any bonuses you get from work are still considered income and are taxable
because it is added money to your income. This bonus can be from a promotion, raise,
award, and etc. However, certain noncash employee achievement awards can be
excluded from income.

18. Mileage Allowance:

If you have a job that requires you to drive, like a door-to-door salesman or a
deliveryman then, this most likely means your company pays for the miles you drive,
these are considered you income because it adds to it.

19. Breach of Contract Damages:

If you break an employment contract, you can deduct damages you pay your
former employer that are attributable to the pay you received from that employer. These
damages are taxable unless awarded to remedy personal physical injury.

20. Military Pay:

In general, if you are a member of the Armed Forces, most of your pay is included
in gross income for federal income tax purposes. All gross income is taxable. You
probably receive basic pay, special pay, bonuses and other payments. All of this counts
as gross income, unless the pay or bonus is for service or re-enlistment while in a
combat zone.

21. Buried Treasure:

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You go treasure hunting and happen to find a treasure; the sum of the treasure you
decide to keep is considered recognizable income.
22. Notary Fees:
It is all-important that notaries keep active logs of all notary-related income. This
may include a simple notary fee that is charged for everyday notarizations such as
acknowledged documents or sworn affidavits. Or, this may be larger payment received
for mobile notary services or loan closings. In these cases, a notary may have generated
a large income throughout the year. This income will be reported on Form 1040
Schedule C.

23. Business Income:

Business income may include income received from the sale of products or
services. For example, fees received by a person from the regular practice of a
profession are business income. Rents received by a person in the real estate business
are business income. A business must include in income payments received in the form
of property or services at the fair market value of the property or services

24. Partnership Income:

Partnership income is pass through to each partner in accordance with the
partnership agreement and is included in the partners gross income for tax. This is
irrespectively of whether the income is distributed.

25. Cancellation of Debts:

According to the IRS, if a debt is canceled, forgiven or discharged, you must
include the canceled amount in your gross income, and pay taxes on that income,
unless you qualify for an exclusion or exception.

26. Pensions:

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Pensions are considered as your income because it is what you make for a living
and what you use to live off. Pensions usually come from 401ks and government jobs.

27. Cancellation of Lease:

Payments received by a tenant for the cancellation of a lease are treated as an
amount realized from the sale of property. Payments received by a landlord (lessor) for
the cancellation of a lease are essentially a substitute for rental payments and are taxed
as ordinary income in the year in which they are received.

28. Per Diem Allowance:

Meal expenses are deductible if your business trip is overnight or long enough
that you need to stop for substantial sleep or rest to properly perform your duties. Meal
expenses are also deductible if the meal is business-related entertainment
29. Christmas Bonuses:
If you receive a bonus or award (cash, goods, services) from your employer, you
must include its value in your income. However, if your employer merely promises to
pay you a bonus or award at some future time, it is not taxable until you receive it or it
is made available to you.

30. Prizes:
Scholarship prizes won in a contest are not scholarships or fellowships if you do
not have to use the prizes for educational purposes. You must include these amounts in
your income on Form 1040, line 21, whether or not you use the amounts for educational
purposes.

31. Commissions:
If you are an employee, your employer probably withholds income tax from your
pay. Tax may also be withheld from certain other income including pensions,
bonuses, commissions, and gambling winnings. In each case, the amount withheld is
paid to the IRS in your name.

32. Professional Fees:

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Legal and professional fees, such as fees charged by accountants, that are
ordinary and necessary expenses directly related to operating your business are
deductible on Schedule C or C-EZ. However, you usually cannot deduct legal fees you
pay to acquire business assets. Add them to the basis of the property.

33. Compensation for Personal Services:

All wages and any other compensation for services performed in the United
States are generally considered to be from sources in the United States. The place,
where the personal services are performed, generally determines the source of the
personal service income, regardless of where the contract was made, or the place of
payment, or the residence of the payer.

34. Punitive Damages:

Punitive damages are taxable and should be reported as Other Income on line
21 of Form 1040, even if the punitive damages were received in a settlement for
personal physical injuries or physical sickness.

35. Debts Forgiven:

If your debt is forgiven or discharged for less than the full amount you owe, the
debt is considered canceled in the amount that you do not have to pay. The law provides
several exceptions, however, in which the amount you do not have to pay is not
canceled debt. These exceptions will be discussed later. Cancellation of a debt may
occur if the creditor cannot collect, or gives up on collecting, the amount you are
obligated to pay. If you own property subject to a debt, cancellation of the debt also
may occur because of a foreclosure, a repossession, a voluntary transfer of the property
to the lender, abandonment of the property, or a mortgage modification.

36. Rents:
Most individuals operate on a cash basis, which means they count their rental
income as income when it is actually or constructively received, and deduct their
expenses when they are paid.

37. Directors Fees:

Fees and other payments you receive for performing services as a director of a
corporation are considered self-employment income. It does not matter whether the fees
are for going to directors' meetings or for serving on committees.

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38. Retirement Pay:

The types of income which are taxable include, but are not limited to: military
retirement pay, all or part of pensions and annuities, all or part of Individual Retirement
Accounts (IRA), unemployment compensation, gambling income, bonuses and awards
for outstanding work, alimony or prizes. A portion of your social security benefits may
be taxable based on your other income and filing status

39. Discounts:
These are amounts the seller permits you to deduct from the invoice price for
prompt payment

40. Rewards:
If you receive a reward for providing information, include it in your income.
41. Dividends:
Dividends are distributions of property a corporation may pay you if you own
stock in that corporation. Corporations pay most dividends in cash. However, they may
also pay them as stock of another corporation or as any other property. You also may
receive distributions through your interest in a partnership, an estate, a trust, a
subchapter S corporation, or from an association that is taxable as a corporation.

42. Royalties:
Royalties from copyrights, patents, and oil, gas, and mineral properties are
taxable as ordinary income.

43. Embezzlement Proceeds:

If you embezzle funds you have to report that income as Other Income on line
21 of Form 1040.

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44. Salaries:
All wages, salaries and tips you received for performing services as an employee
of an employer must be included in your gross income. Amounts withheld for taxes,
including but not limited to income tax, social security and Medicare taxes, are
considered "received" and must be included in gross income in the year they are
withheld. Generally, your employer's contribution to a qualified pension plan for you is
not included in gross income at the time it is contributed.

45. Employee Death Benefits:

When a participant in a retirement plan dies, benefits the participant would have
been entitled to are usually paid to the participants designated beneficiary in a form
provided by the terms of the plan (lump-sum distribution or an annuity).

46. Severance Pay:

Severance pay and unemployment compensation are taxable. Payments for any
accumulated vacation or sick time are also taxable. You should ensure that enough taxes
are withheld from these payments or make estimated payments.

47. Employees Awards:

Don't withhold federal income, social security, or Medicare taxes on the fair
market value of an employee achievement award if it is excludable from your
employee's gross income. To be excludable from your employee's gross income, the
award must be tangible personal property (not cash, gift certificates, or securities) given
to an employee for length of service or safety achievement, awarded as part of a
meaningful presentation, and awarded under circumstances that don't indicate that the
payment is disguised compensation. Excludable employee achievement awards also
aren't subject to FUTA tax

48. Social Security Benefits:

If you receive Social Security benefits, you may have to pay federal income tax
on part of your benefits. These IRS tips will help you determine whether or not you
need to pay taxes on your benefits. They also explain the best way to file your tax
return

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49. Employees Bonuses:

You can generally deduct a bonus paid to an employee if you intended the bonus
as additional pay for services, not as a gift, and the services were performed. However,
the total bonuses, salaries, and other pay must be reasonable for the services
performed.

50. Estate and Trust Income:

The fiduciary of a domestic decedent's estate, trust, or bankruptcy estate files this
form to report:
a. the income, deductions, gains, losses, etc. of the estate or trust,
b. the income that is either accumulated or held for future distribution or distributed
currently to the beneficiaries,
c. any income tax liability of the estate or trust, and
d. Employment taxes on wages paid to household employees.

51. Supplemental Unemployment:

Supplemental unemployment benefits (SUB) plans arose out of attempts by some
labor unions to negotiate guaranteed annual wage plans. Their primary concern was the
difference between the workers average weekly earnings received when employed, and
the unemployment benefits received by workers when unemployed. Consequently,
supplemental unemployment benefit plans developed instead of guaranteed annual
wage plans.

52. Benefits:
Fringe benefits are generally included in an employees gross income (there are
some exceptions). The benefits are subject to income tax withholding and employment
taxes. Fringe benefits include cars and flights on aircraft that the employer provides,
free or discounted commercial flights, vacations, discounts on property or services,
memberships in country clubs or other social clubs, and tickets to entertainment or
sporting events

53. Tips and Gratuities:

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This is what is paid from customers towards the employee and

not the employer.

54. Executors Fees:

All personal representatives must include fees paid to them from an estate in their
gross income. If you are not in the trade or business of being an executor (for instance,
you are the executor of a friend's or relative's estate), report these fees on your Form
1040, line 21. If you are in the trade or business of being an executor, report fees
received from the estate as self-employment income on Schedule C, Profit or Loss
From Business; or Schedule C-EZ, Net Profit From Business, of your Form 1040.

55. Travel Allowances:

You can deduct all your travel expenses of getting to and from your business
destination if your trip is entirely for business or considered entirely for business.
Travel entirely for business. If you travel outside the United States and you spend the
entire time on business activities, you can deduct all of your travel expenses.

56. Fees:
The amount of the user fee depends on the applying organization's average annual
gross receipts. If the organization's average annual gross receipts have exceeded or will
exceed $10,000 annually over a four-year period, the fee is $850. If gross receipts have
not exceeded or will not exceed $10,000 annually over a four-year period, the user fee
is $400. An applicant must certify its gross receipts in Part XI.

57. Unemployment Compensation:

The amount of the user fee depends on the applying organization's average annual
gross receipts. If the organization's average annual gross receipts have exceeded or will
exceed $10,000 annually over a four-year period, the fee is $850. If gross receipts have
not exceeded or will not exceed $10,000 annually over a four-year period, the user fee
is $400. An applicant must certify its gross receipts in Part XI.

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58. Gain from Sale of Property:

Almost everything you own and use for personal or investment purposes is a
capital asset. Examples include a home, personal-use items like household furnishings,
and stocks or bonds held as investments. When you sell a capital asset, the difference
between the adjusted basis in the asset and the amount you realized from the sale is a
capital gain or a capital loss. Generally, an asset's basis is its cost to the owner, but if
you received the asset as a gift or inheritance, refer to Topic 703 for information about
your basis. For information on calculating adjusted basis, refer to Publication
551, Basis of Assets. You have a capital gain if you sell the asset for more than your
adjusted basis. You have a capital loss if you sell the asset for less than your adjusted
basis. Losses from the sale of personal-use property, such as your home or car, are not
tax deductible.

59. U.S. Savings Bonds (interest):

Most interest that you either receive or is credited to your account and that you
can withdraw without penalty is taxable income in the year it becomes available to you.
In addition, some interest you receive may be tax-exempt. You should receive Copy B
of Form 1099-INT (PDF) or Form 1099-OID (PDF) with respect to payments of
interest of $10 or more, showing the taxable or reportable tax-exempt interest. You
must include in income on your federal income tax return all interest received that is
taxable, even if you do not receive Copy B of Form 1099-INT or 1099-OID. You must
give the payer of your interest income your correct taxpayer identification number. If
you do not, you may be subject to a penalty and backup withholding. Refer to Topic
307 for information on backup withholding.

60. Gain from Sale of Securities (including government securities):

If you sold property such as stocks, bonds, mutual funds, or certain commodities
through a broker during the year, the broker should send you, for each sale, a Form
1099-B, Proceeds From Broker and Barter Exchange Transactions. You should receive
Form 1099-B for 2015 by February 16, 2016. It will show the gross proceeds from the
sale. The IRS will also get a copy of Form 1099-B from the broker.

61. Wages:
All wages, salaries and tips you received for performing services as an employee
of an employer must be included in your gross income. Amounts withheld for taxes,
including but not limited to income tax, social security and Medicare taxes, are
considered "received" and must be included in gross income in the year they are
withheld. Generally, your employer's contribution to a qualified pension plan for you is
not included in gross income at the time it is contributed. Additionally, while amounts
withheld under certain salary reduction agreements with your employer are generally
excluded from gross income, such amounts may have to be included in wages subject to
social security and Medicare taxes in the year they are withheld.

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Exclusions from Income

1. Certain death benefits: Exclusion from gross income of proceeds of life insurance
contracts payable by reason of death.
2. Gifts and inheritances: This can be considered property, money, or valuable items that
have been given to you by a family or friend who is deceased or living.
3. Interest on state and local bonds: You dont pay an income tax on the interest. State
and local bonds are interested in taxpayers who have a higher income tax because it is
tax-free.
4. Compensation for injuries or sickness: Any damages occurred in an individual like
sickness or and injury, they receive workers compensation.
5. Amounts received under accident and health plans: All of these amounts are included
in an individuals gross income
6. Contributions by employer to accident and health plans: This employees gross
income doesnt include the employers coverage under an accident or health plan.
7. Rental value of parsonages: The is the rental amount paid as a part of compensation
towards an individual.
8. Income from discharge of indebtedness: This results in a realization of income. For
example, a person performs services for a creditor who cancels the debt, and then the
debtor realizes the income of their debt.
9. Improvements by lessee on lessors property: For this, gross income doesnt include
income other than rent by a lessor of real property.
10. Qualified lessee construction allowances for short-term leases: Gross income of a
lessee isnt included any amount received of cash.
11. Recovery of tax benefit items: This is the amount of an expense that is recovered
included in the year of recovery and to the original expense that is the tax benefit.
12. Certain combat zone compensation of members of the Armed Forces: For this, gross
income doesnt include compensation received for a member below the position of a
commission officer in the armed forces.
13. Income of States, municipalities, etc.: It is the income that is about the government of
any possession of the US.
14. Qualified scholarships: This is excluded from your gross income only if you are
someone who qualifies for a degree.
15. Contributions to the capital of a corporation: This is the total amount of equity

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recorded by an organization.
16. Meals or lodging furnished for the convenience of the employer: This is the value of
meals that are furnished for the employee by the employer.
17. Amounts received under qualified group legal services plans: The gross income of an
employee, or his spouse, or his dependents doesnt include the amount distributed by the
employer on behalf of his employee.
18. Exclusion of gain from sale of principal residence: According to this, a taxpayer can
gain up to $250,000 realized on sale or exchange of the taxpayers principal residence.
19. Certain reduced uniformed services retirement pay: When it comes to this, gross
income doesnt include the amount of any reduction of uniformed services.
20. Amounts received under insurance contracts for certain living expenses: If a case of
an individual whose residence is damaged or destroyed, gross income does not include
any amount received for the individual.
21. Cafeteria plans: This is what an employer offers to their employees so that they buy
benefits with pre-taxed dollars. This then allows employees to decrease their income tax
liability.
22. Certain cost-sharing payments: This is what an individual has to pay for their items or
particular service.
23. Educational assistance programs: These programs are provided in your workplace and
comes with benefits such as payments for tuition, fees and expenses, books, supplies,
and equipment.
24. Dependent care assistance programs: This is a tax arrangement by which an employer
makes up for his/her employees expenses.
25. Certain personal injury liability assignments: Any amount received for agreeing to an
assignment isnt included in gross income.
26. Certain foster care payments: The amount received by a foster care provider during
the taxable year.
27. Certain fringe benefits: These benefits include: no additional cost-service, qualified
employee discount, and a working condition fringe.
28. Certain military benefits: These are benefits received by any member of the US armed
forces or are any dependent of such member.
29. Income from United States savings bonds used to pay higher education tuition and
fees: This is the income used from the US in order to pay off higher taxed fees regarding
higher education.
30. Energy conservation subsidies provided by public utilities: These can be the use of
natural gases any improvements done for the environment or state. These are considered
a state incentives program, which makes them unsure whether they are taxable to
income, as of now it seems that residents of that state or city can exclude this tax.
31. Adoption assistance programs: Any money you get from adoption assistance is not
included in the gross income because the money should be used to provide for the childe.
32. Medicare Advantage MSA: This is a type of health care an employer or trustee can
offer somebody so they dont have to pay as many medical expenses.
33. Disaster relief payments: These are payments that a family or individual might qualify
for when a disaster hits. Such as, funeral expenses, repair expenses, living expenses, and

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etc.
34. Federal subsidies for prescription drug plans:
Medicare Part D, also called the Medicare prescription drug benefit, is a United States
federal-government program to subsidize the costs of prescription drugs and prescription
drug insurance premiums for Medicare beneficiaries.
35. Benefits provided to volunteer firefighters and emergency medical responders: Any
benefit provided by firefighters or medics is excluded from there income.
36. COBRA premium assistance: This is a type of health insurance that employers pay for
employees when they are terminated involuntarily.
37. Indian health care benefits: This is a specific health insurance for American Indians,
and it can be anything from private health to Medicaid.
38. Indian general welfare benefits: This gives the tribes exclusion from gross income
because of their beliefs and rights, such as, ceremonial activates and basically anything
with cultural significance.
39. Cross references to other Acts: An example of something like this would be a person
who serves the U.S. in a different country, will receive expenditures from any money lost
because of foreign currency.

Exclusions from Gross Income:

Annuities (amounts contributed by taxpayer)
The pension or annuity payments that you receive are fully taxable if you have no
investment in the contract due to any of the following situations:
You did not contribute anything or are not considered to have contributed anything for
your pension or annuity
Your employer did not withhold contributions from your salary, or
You received all of your contributions (your investment in the contract) tax-free in
prior years
If you contributed after-tax dollars to your pension or annuity, your pension payments are
partially taxable. You will not pay tax on the part of the payment that represents a return of the
after-tax amount you paid.
Awards for Noncompetitive Achievements
Bequests and Devises
The value of property acquired by gift, bequest, devise, or descent: Provided, however,
That income from such property, as well as gift, bequest, devise or descent of income from any
property, in cases of transfers of divided interest, shall be included in gross income.

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Car Pool Receipts

You cannot deduct the cost of using your car in a nonprofit car pool. Do not include
payments you receive from the passengers in your income. These payments are considered
reimbursements of your expenses. However, if you operate a car pool for a profit, you must
include payments from passengers in your income. You can then deduct your car expenses
(using the rules in this publication).
Child Support Payments
Child support payments are neither deductible by the payer nor taxable to the payee. When
you calculate your gross income to see if you are required to file a tax return, do not include
child support payments received.
Cost-of-Living Allowances Paid to U.S. Employees Stationed Outside the U.S.
If you are stationed outside the continental United States or in Alaska, your gross income
does not include cost-of-living allowances granted by regulations approved by the President of
the United States (other than amounts received under Title II of the Overseas Differentials and
Allowances Act). Cost-of-living allowances are not included on your Form W-2.
Damages Received for: Personal Injuries or Sickness
Amounts received, through Accident or Health Insurance or under Workmen's
Compensation Acts, as compensation for personal injuries or sickness, plus the amounts of any
damages received, whether by suit or agreement, on account of such injuries or sickness.
Disability and Death Payments
Generally, if you receive the proceeds under a life insurance contract as a beneficiary due
to the death of the insured person, the benefits are not includable in gross income and do not
have to be reported.
Dividends on Life Insurance
Companies pay life insurance policy dividends on the policy anniversary date, one year
after it accrued. The Internal Revenue Service (IRS) doesn't consider dividends as personal
income until the value of the dividend exceeds the net premiums paid on the policy. At that
point, the insured reports the dividends as income on his federal tax return.
Federal Employees Compensation Act Payments
The Federal Employees' Compensation Act (FECA) provides Workers' Compensation
benefits to Federal employees who sustain job-related injuries or illnesses. Title 5 USC 8151
and Federal Regulations 5 CFR part 353 also provides injured workers with certain rights once
they fully or partially recover from the compensable injury or illness. The regulations at 20
CFR part 10 also require injured workers who have fully or partially recovered to seek and
accept suitable work when no longer totally disabled.

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Inheritances
Gross income does not include the value of property acquired by gift, bequest, devise, or
inheritance.
To determine if the sale of inherited property is taxable, you must first determine your basis
in the property. The basis of property inherited from a decedent is generally one of the
following:
The fair market value (FMV) of the property on the date of the decedent's death.
The FMV of the property on the alternate valuation date if the executor of the estate
chooses to use alternate valuation.
Lessees Improvements
Gross income does not include income (other than rent) derived by a lessor of real property
on the termination of a lease, representing the value of such property attributable to buildings
erected or other improvements made by the lessee.
Life Insurance Proceeds
The proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of
the insured, whether in a single sum or otherwise, but if such amounts are held by the insurer
under an agreement to pay interest thereon, the interest payments shall be included in gross
income.
Long-Term Care Insurance
According to the Internal Revenue Service (Publication 525), long-term care insurance is
treated much like health insurancethe dollar amounts the policyholder receives (other than
dividends and premium refunds) for personal injury or sickness generally are excludable from
income, and the premiums paid generally are tax deductible. Long-term care policies must
have these features to qualify for the deductions: be guaranteed renewable; not provide for a
cash surrender value or other money that can be paid, assigned, pledged or borrowed; and not
pay for or reimburse expenses that would be reimbursed under Medicare.
Moving Expenses
You can deduct your moving expenses if you meet all three of the following requirements:
1.Your move is closely related to the start of work.
2.You meet the distance test.
3.You meet the time test.
If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses,
you can deduct the reasonable expenses of:
A) Moving your household goods and personal effects (including in-transit or foreignmove storage expenses),
B) Traveling (including lodging but not meals) to your new home.

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Payments to Beneficiary of Deceased Employee

The Internal Revenue Service (IRS) requires that when a beneficiary is paid in the same
calendar year as the employees passing, Social Security and Medicare taxes must be withheld
from a deceased employees final wage payment. When the payment is made in a subsequent
calendar year, the beneficiary is paid the gross wage amount. Important! In both instances,
Income taxes are not withheld.
Political Campaign Contributions (limited)
Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely
prohibited from directly or indirectly participating in, or intervening in, any political campaign
on behalf of (or in opposition to) any candidate for elective public office. Contributions to
political campaign funds or public statements of position (verbal or written) made on behalf of
the organization in favor of or in opposition to any candidate for public office clearly violate
the prohibition against political campaign activity. Violating this prohibition may result in
denial or revocation of tax-exempt status and the imposition of certain excise taxes.
Railroad Retirement Act Pensions
Benefits paid under the Railroad Retirement Act fall into two categories. These categories
are treated differently for income tax purposes.
The first category is the amount of tier 1 railroad retirement benefits that equal the social
security benefit that a railroad employee or beneficiary would have been entitled to receive
under the social security system. This part of the tier 1 benefit is the social security equivalent
benefit (SSEB) and you treat it for tax purposes like social security benefits. If you received,
repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2015, you will
receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S,
Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if
you are a nonresident alien) from the U.S. Railroad Retirement Board (RRB). For more
information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB1099 and RRB-1042S, see Publication 915. The second category contains the rest of the tier 1
railroad retirement benefits, called the non-social security equivalent benefit (NSSEB). It also
contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Treat
this category of benefits, shown on Form RRB-1099-R, as an amount received from a
qualified employee plan. This allows for the tax-free (nontaxable) recovery of employee
contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. Tier 2 benefits,
less certain repayments, are combined into one amount called the Contributory Amount Paid
on Form RRB-1099-R.) Vested dual benefits and supplemental annuity benefits are noncontributory pensions and are fully taxable. See Taxation of Periodic Payments, later, for
information on how to report your benefits and how to recover the employee contributions taxfree. Form RRB-1099-R is used for U.S. citizens, resident aliens, and nonresident aliens.
Scholarships (limited amount)
A scholarship is generally an amount paid or allowed to a student at an educational

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institution for the purpose of study. A fellowship grant is generally an amount paid or allowed
to an individual for the purpose of study or research. Other types of grants include need-based
grants (such as Pell Grants) and Fulbright grants.
If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts
you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if
you meet the following conditions:
You are a candidate for a degree at an educational institution that maintains a regular
faculty and curriculum and normally has a regularly enrolled body of students in
attendance at the place where it carries on its educational activities; and
The amounts you receive are used to pay for tuition and fees required for enrollment or
attendance at the educational institution, or for fees, books, supplies, and equipment
required for courses at the educational institution.
Social Security Payments (depending on gross income)
Social security benefits include monthly retirement, survivor and disability benefits. They
do not include supplemental security income (SSI) payments, which are not taxable. The
amount of social security benefits that must be included on your income tax return and used to
calculate your income tax liability depends on the total amount of your income and benefits for
the taxable year.
Tuition Paid by Employer (job-related only)
If you receive educational assistance benefits from your employer under an educational
assistance program, you can exclude up to $5,250 of those benefits each year. This means your
employer shouldn't include those benefits with your wages, tips, and other compensation
shown on your Form W-2, box 1. This also means that you don't have to include the benefits
on your income tax return.
Veterans Benefits
1. Disability Compensation
2. Pension
3. Education and training
4. Services for dependents and survivors
Workers Compensation and Similar Payments
Amounts you receive as workers' compensation for an occupational sickness or injury
are fully exempt from tax if they are paid under a workers' compensation act or a statute
in the nature of a workers' compensation act. The exemption also applies to your
survivors. The exemption, however, does not apply to retirement plan benefits you
receive based on your age, length of service, or prior contributions to the plan, even if
you retired because of an occupational sickness or injury.

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References:

https://www.irs.gov/
https://www.wikipedia.org/
www.investopedia.com/
www.businessdictionary.com/definition/accounting.html
www.accountingcoach.com/

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