Tax Blog Online

We work all year round and end up in paying heavy taxes, that’s really discouraging. You pay tax on every cent you earn that year, right? No, it isn’t, not every fraction of your income is taxable.

Let me explain you what is your taxable income and non-taxable income, which will make you smart enough when it comes to pay taxes or figure out what to do with your month’s salary. Give yourself more money for other things –

Here is the list of Non-taxable income commodities:

•    The funds that you have lent and that is repaid
•    Payments for your child support
•    Rolled over money from 401(k) to IRA and other 401(k) account, when you change your job

•    The returned money from your investments – the returns from the invested capital
•    The money which is contributed to Flexible Spending Accounts and that is used for medical expenses or childcare through work
•    The disability income on the benefits which is paid for after-tax dollars
•    Payments that has been contributes through certain type of retirement accounts

List of taxable income commodities:

•    The withdrawals from annuity or IRA
•    Income from royalty, gambling, bartering and lottery
•    Mutual Funds capital gains and other investments
•    Compensation for unemployment
•    Sick pay, severance pay and bonuses from the employer
•    Interests of the few taxable bonds
•    Checking and savings account’s interest
•    Your net salary

Ironically, by applying all these theories if you convert your money from taxable income to non-taxable income, then definitely you won’t pay any taxes at all; but practically, you won’t be left with any money to live on.