The IRS tax laws can be extremely complex even to a tax expert, never mind the average taxpayer. When it comes to determining if income is taxable or non-taxable, you may want to leave it up to your tax preparer or accountant. Here are some tax tips that may provide anwers to tax questions related to income.

Most income is considerable taxable but there are exceptions. In fact, there are certain types of income that is either partially taxed or not taxed at all. Here are some tax tips from the IRS to help taxpayers understand about taxable and non-taxable income.

The following items are examples of items that are NOT taxable:

• Adoption Expense Reimbursements for qualifying expenses
• Child support payments
• Gifts, bequests and inheritances
• Workers’ compensation benefits
• Meals and Lodging for the convenience of your employer
• Compensatory Damages awarded for physical injury or physical sickness
• Welfare Benefits
• Cash Rebates from a dealer or manufacturer

Some income may be taxable under certain circumstances, but not taxable in other situations. Examples of items that may or may not be included in your taxable income are:

• Life Insurance If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds, which were paid to you because of the insured person’s death, are not taxable unless the policy was turned over to you for a price.
• Scholarship or Fellowship Grant If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.
• Non-cash Income Taxable income may be in a form other than cash. One example of this is bartering,which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.
• All other items—including income such as wages, salaries, tips and unemployment compensation — are fully taxable and must be included in your income unless it is specifically excluded by law.

These examples are not all-inclusive. For more information, see Publication 525, Taxable and Nontaxable Income, which can be obtained by visiting the IRS website or by calling the IRS at 800-TAX-FORM (800-829-3676). The website also provides a wealth of tax tips, tax help and even get you answers to your tax questions.

source: irs.gov

The global recession has put millions of American out of work in 2009. If you are one them, you need to know the answer to the following federal tax questions:

1. Are there tax breaks or tax exemptions for unemployment compensation when filing my 2009 Federal income tax return?

2. Where can I get the tax help to answer this federal tax question?

To get the answer you could search the IRS website, contact an IRS agent for federal tax help, consult an income tax attorney, talk to your tax accountant or wade through the 2009 federal income tax manual and get the answer yourself.

Or you can get this important tax information below:

Yes, there is a tax benefit for those who received unemployment compensation in 2009.

The first $2,400 of 2009 Unemployment Compensation is TAX-FREE.

This is a one-year federal income tax exemption granted by the stimulus act.

Unemployment benefits above the $2,400 limit will still count as taxable income.

source: smartmoney

I am often asked what are the best ways to save money on a tax return? That answer depends on some many different parameters, including: do you own a home, do you have children, do you own securities, a second home, are you self employed, do you use childcare, are you filing separately or joint and, of course, how many money do you earn each year. And the list goes on and on.  My best recommendation is if you think your tax situation is too complicated, see a tax pro and get advice now!

Here are some simple tips for reducing your tax burden – and now is the time to act.  Why? Because the end of the year is less than two months away.

Okay, here goes…

IRA, SIMPLE IRA or SEP
One way to lower your taxable income for the year is to open or contribute to your IRA. Put in as much money as you can afford, up to the maximum deduction.

You can contribute to your 401(k), 403(b), deductible IRA, SIMPLE IRA or SEP. You could have made contributions for your 401(k)s and 403(b)s until up until Dec. 31, 2008. But you have until April 15, 2009 to make a contribution to an IRA.

Charitable Donations
Donating money to charities before the end of the year will count as a deduction in 2008.  You can include any  contributions charged to your credit card, even if you don’t pay it until 2009.  For any cash contributions, also ask for a receipt or use a check.

If you donate property, you can deduct the fair market value. There isn’t an exact calculation. When trying to come with an estimate, consider how much it would sell for at a garage sale (unless it’s an antique).

Stock Sales
2008 will be a year where many of us will take a hit on our stock portfolios. If you need the cash, you might consider selling the stock in 2008 and take the loss.  But talk to your tax consultant before taking this measure.  You need to consider the short term or long term ramifications of such an action.

Remember however, if you do sell stock to generate a loss, you are prohibited from purchasing substantially identical stock within the period beginning 30 days before and ending 30 days after the sale that generated the loss.