Chapter 2
Taxable & Nontaxable Income

Generally, income is taxable unless it is specifically exempted (not taxed) by law. Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds.

Under special provisions of the law, certain items are partially or fully exempt from tax. Provisions that are of special interest to older taxpayers are discussed in this chapter.

• Compensation for Services
• Retirement Plan Distributions
• Social Security and Equivalent Railroad Retirement Benefits
• Sickness and Injury Benefits
• Disability Income
• Life Insurance Proceeds
• Sale of Home
• Other Items

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