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Learning about tax-free income for Georgia residents

On Behalf of | Mar 26, 2015 | Income Taxes

In many cases, individuals are required to pay taxes on any income from wages, investments or prize winnings. However, there are times when income is not considered to be taxable. For instance, if an individual wins an award, he or she may not need to pay taxes on any money that comes with the award. This is true if the winner does not need to perform substantial services in the future or if the money is donated to charity.

Furthermore, the person who won the money must not have entered a contest or taken any specific action to be considered for the award. Those who receive interest on state or federal government bonds generally do not have to pay taxes on those bonds. While an individual has to pay taxes on United States Savings Bonds, the taxes don’t have to be paid until the bonds are actually cashed.

For those who use the bonds to pay tuition, there may be a tax break available to them. To qualify for the tax break, the bond must be owned by someone who is over the age of 24 who redeems that bond during a year in which he or she actually paid tuition. They are not exempt if a qualified person makes more than $77,200 a year or $115,750 for joint filers.

Those who have questions about their income taxes or are being audited by a state or federal government tax agency may wish to consult with a tax attorney. An attorney may be able to negotiate on behalf of an individual to resolve an audit or other issues favorably. It may be possible for an attorney to do this without his or her client present, which may save time and lower stress for a taxpayer.