Unformatted text preview: Chapter 5 Chapter 5 Exclusions
(Income not reportable) Gifts & Inheritances Life Insurance Proceeds Scholarships Awarded Damages Compensation for Injuries & Sickness Workers Compensation EmployerSponsored Accident & Health Plans LongTerm Care Insurance Benefits Meals & Lodging Paid by Employer Other Fringe Benefits Foreign Earned Income Municipal Bonds/Educational Savings Bonds Categories of EXCLUSIONS Categories of EXCLUSIONS General Categories General Categories Gifts & Inheritances Exception: Gifts to Employees by their employers Exception: (unless paid to surviving spouse or children as a result of a disaster or death of employee, not final compensation, and is stated company policy) Life Insurance Proceeds (death benefits or accelerated Life death benefits) -Cashing in a policy may result in income if proceeds exceed premiums paid. -Annuitizing a death benefit usually results in income -Annuitizing Scholarships for Tuition, Books, Supplies ONLY Exception: Room & Board is taxable Exception: taxable General Categories cont General Categories cont Compensation For Physical Injury/Illness Compensation Physical Exclusions are NOT allowed for: Exclusions NOT Replacement of Income Replacement Punitive Damages Emotional Distress; Libel; Slander Discrimination Awards Property Damage In Excess of Property Basis General Categories cont General Categories cont Accident & Health Insurance Benefits from a policy Accident purchased by the taxpayer (including replacement income, i.e. disability insurance) income, Workers’ Compensation Benefits Employer Sponsored (paid) Accident & Health Plans Accident Only payments for qualified medical expenses & AD&D are excluded Payments for income replacement are includible in income includible in Benefits from Medical Reimbursement Plans & HSA’s Long-term care policy (For 2010: greater of $290/day or Long-term actual daily cost) (up from $280/day in 2009) actual General Categories cont General Categories cont Meals & Lodging Furnished by Employer Must Be On Employer Premises AND Must On AND For Employer’s Convenience Certain Employer-Provided Fringe Benefits Cafeteria Plans Choice of non-taxable benefits Flexible Spending (Benefit) Plans Flexible “Use It or Lose It” Plans General Categories cont General Categories cont Employer Provided Fringe Benefits -contEmployee Discounts -up to gross profit % for goods -up to 20% for services Moving Expense Reimbursements De Minimis Benefits – too small to count Parking & Transportation Allowance - $230/month for transportation - $230/month for parking No Additional Cost Services General Categories cont General Categories cont Municipal Bond Interest Income Stock Dividends (reduces basis instead) Interest from Educational Savings Bonds Earnings from §529 Tuition Programs Foreign Income (up to $91,500 for 2010) Time requirement = 330 days out of 365 days Minister/Military Housing Allowance Discharge of Indebtedness via Bankruptcy, Discharge Insolvency, and “conditional” student loans Insolvency, ...
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- Fall '08
- Employee Benefit, health insurance benefits, general categories