Understanding Income Tax: What You Need to Know

💰Wages and salaries, alimony, annuities, and retirement income are prime examples of taxable income.

📝Inherited money, gifts, insurance proceeds, scholarships, and grants are not taxable income.

🧾Unemployment compensation and taxable Social Security benefits should be reported on the tax return.

💼Business income and self-employment activity need to be included in the income tax calculations.

🌐Certain types of income, such as gambling winnings and forgiven debt, may have specific tax implications.

Are gifts and inheritances taxable?

—No, gifts and inheritances are not taxable income at the federal, state, or local levels.

Which types of income are taxable?

—Wages, salaries, alimony, annuities, retirement income, unemployment compensation, and certain Social Security benefits are examples of taxable income.

Do I need to report business income on my tax return?

—Yes, business income and self-employment activity should be included in your income tax calculations.

What should I do if I received unemployment compensation?

—You need to report unemployment compensation on your tax return as it is considered taxable income.

Are all scholarships and grants taxable?

—No, scholarships and grants used for educational purposes are typically not taxable income.

00:00Introduction and welcome to the video

00:50Overview of the income tax side of the VITA program

01:59Examples of taxable income: wages, alimony, annuities, retirement income

03:49Discussion on business income and self-employment activity

05:29Explanation of taxable Social Security benefits

08:23Different types of income with specific tax implications

09:59Answering frequently asked questions

11:30Conclusion and final remarks