Types of Income
Below are different types of income for tax filing purposes. If you are retired to file a tax
return, you must report all the taxable income (income subject to tax) you received during the tax year on the
IRS tax form 1040.
What does taxable income include?
Taxable income includes:
earned income such as wages and self employment income and
unearned income such as interest and dividends, most pension income, income from
rental property and unemployment compensation
What is nontaxable income?
Nontaxable income is income that is not subject to tax which includes:
federal tax refunds
interest on municipal bonds (not that tax exempt interest on munis is reported on the form 1040)
public assistance payments
most life insurance proceeds
part or all of social security benefits
Wages, Salaries, and Tips
Wages, Salaries, and tips that are earned as an employee are the most common type of income for
taxpayers. Wages and other employee compensation are taxable whether paid in cash or in the form of goods, property
How are wages, salaries and tips reported?
Wages, salaries and tips are reported on the form W-2 (Wages and Tax
Statement) which employers are required to send out to taxpayers by January 31. The form W-2 shows
reported income for the tax year.
Where and how to report unreported income not on W-2 or 1099?
Unless specifically excluded (not included in gross income by a provision of the tax law) the
cash and the value of goods, services, and property received from an employer are taxable and must be reported on
line 7 (Wages, Salaries, Tips, etc.) of the tax form 1040.