January 6 2023

IRS Issues Guidance Discussing Taxable and Non-taxable Income for 2022 Tax Return Filing Purposes

Source: IBFD Tax News Research Platform

The US Internal Revenue Service (IRS) has issued guidance discussing types of income and explaining whether they are taxable or non-taxable income for purposes of filing 2022 tax returns.

According to the guidance, which the IRS issued on 4 January 2023, income is generally taxable unless it is specifically exempted by law. Taxpayers must report and pay taxes on taxable income and may be required to report non-taxable income on their tax returns.

The guidance discusses, among others:

  • employee wages;
  • fringe benefits,
  • income from bartering;
  • partnerships;
  • S corporations;
  • royalties;
  • disability pensions;
  • life insurance proceeds; and
  • welfare and other public assistance benefits.

In addition, the guidance highlights certain changes for tax year 2022. Specifically, for tax year 2022, taxpayers who participate in a 401(k), 403(b), or the federal government's Thrift Savings Plan (TSP), could annually contribute up to USD 20,500 (USD 27,000 if age 50 or older). Previously, the deferred compensation contribution limit was USD 19,500 in 2021.

Moreover, for tax years beginning in 2022, the dollar limitation under IRC section 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is USD 2,850.