What Types of Income Are Taxable?

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What Types of Income Are Taxable?

When adding or editing a money type in a payroll, click the “taxable” box to indicate if this money paid should be included in taxable income, or if it’s non-taxable income.  If the money is not taxable, uncheck this box.

Examples of taxable income are:

  • Regular Earnings
  • Bonus
  • Commission
  • Tips
  • Vacation Payout
  • Severance Pay
  • Awards
  • Back Pay
  • Sick Pay, when the employee pays for a sick leave insurance policy with pre-tax dollars

Examples of non-taxable income are:

  • Expense reimbursement
  • Mileage reimbursement
  • Tuition Reimbursement up to IRS Limits
  • Sick Pay, when the employee pays for a sick leave insurance policy with after-tax dollars

See IRS Publication 15 – Employer’s Tax Guide for more reference on which income types should be taxed.

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