4 Outline Notes Chapter 4.docx

4 Outline Notes Chapter 4.docx - Outline Notes Outline...

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Outline Notes Outline Notes Chapter 4 1. Filing Status – See Word document on Blackboard 2. Personal and Dependency Exemptions – See Word document on Blackboard 3. Tax Rate Schedule – Document on Blackboard or front cover of textbook 4. TAX FORM – U.S Individual Income Tax Return (example pages 2-8 and 2-9 textbook) Chapter 4 – Gross Income EXCLUSIONS Self-help income is not taxable, BUT the exchange of services between two individuals is TAXABLE . The value of gifts and inheritances received are not taxable. o If you subsequently sell the item you may have taxable income . That is discussed in Ch. 5 As discussed in Chapter 3, prizes and awards are generally taxable unless you received the amount by no action of your own AND the prizes/awards are given to charity. (If you keep anything, it’s taxed.) _________________________________________________________________________________ Life insurance proceeds paid to a beneficiary upon death are NOT taxable. o This exclusions is regardless if the amount is paid in full or in installment payments. o If the lump sum or installment payments exceed the face amount of the insurance policy, then the amounts ABOVE THE FACE AMOUNT are taxable
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