What income is considered taxable by the IRS? Are Social Security benefits taxable?

“You can receive income in the form of money, property, or services. …,” reads Internal Revenue Service Publication 525, titled “Taxable and Nontaxable Income.”

“In most cases, an amount included in your income is taxable unless it is specifically exempted by law.”

Examples of taxable income:

Alimony.

Bonuses.

Fees earned for executor or estate administrator services.

Freelance earnings.

Back pay.

Severance pay.

Contest winnings and prizes, including lottery and raffle money.

Unemployment benefits.

Jury duty pay.

Money for serving on a board of directors.

Canceled debts.

Royalties.

Capital gains.

Embezzlement proceeds.

Found money.

Profits made via sales to family members.

Tips.

Some annuities.

Wages and salaries.

Under certain circumstances the taxes paid for Social Security and Medicare fall into the wages and salaries category and are taxable.

“If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return,” reads the IRS guide.

“The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. However, these payments aren’t treated as social security and Medicare wages if you’re a household worker or a farm worker.”

Whether Social Security benefits are taxable depends on the recipient’s income, and the IRS taxes no more than 85 percent of benefits.

People who file individual returns will pay taxes on their benefits if their “combined income” — i.e., the sum of adjusted gross income, nontaxable interest and half of their Social Security benefits — exceeds $25,000.

The benefits of joint filers are taxable if their combined income exceeds $32,000, and married people filing separate returns will likely have to pay taxes on their benefits.

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Online: www.irs.gov/pub/irs-pdf/p525.pdf; www.ssa.gov/planners/taxes.html.

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The Informer answers questions from readers each Sunday, Monday and Wednesday. It is researched and written by Andrew Perzo, an American Press staff writer. To ask a question, call 494-4098 and leave voice mail, or email informer@americanpress.com.