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What are some examples of such exclusions in gross income?

Question

What are some examples of such exclusions in gross income?

check_circleAnswer
Step 1

Gross Income:

 

For individual:

 

Gross income includes the income of an individual in the form of wages, salary, pension, alimony, interest, dividend or rental income. In order to calculate income tax, there are various exclusions from gross income.

Step 2

For individual:

 

Examples of exclusions from gross income:

 

  • Interest on state and municipal bonds.
  • Social security benefit.
  • Gifts and inheritances
  • Life insurance proceeds
  • Scholarships etc.
Step 3
  • Interest on state and municipal bonds: It is known as tax-exempt interest which provided by some states for federal income tax.
  • Social security benefit: Certain amount of some Social security benefit is excluded from gross income which will vary year to year.
  • Gifts and inheritances must not be received from employee and must have donative intent, thus it comes under excl...

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