Income that is Not Taxable
Almost all income earned by American citizens is taxable but there are some exceptions that the IRS makes based on taw law. Some forms of income that the IRS deems not to be nontaxable include adoption expense reimbursements, child support, gifts, worker’s compensation benefits, welfare benefits, and economic stimulus payments received during the last tax year.
Then there are a couple forms of income that are at times taxable and at other times nontaxable. When you are the beneficiary of a life insurance policy, those proceeds are not taxed. But if an insured cashes out a life insurance policy than income from the event is taxable. Another good example is scholarship and grant money for college. Both scholarship and grant money used for tuition is not taxable. But money from either source used for room and board is taxable by the federal government.
For a more in-depth look at Taxable and Nontaxable Income take a look at IRS publication 525.