If you are married, each spouse can exclude this amount. However, for the 2020 tax year, up to $10,200 of unemployment benefits can be excluded from income.

Typically, unemployment compensation is also considered taxable income. However, if you use the money for room and board, or use it to pay other personal expenses, that portion is normally taxable. Money from a qualified scholarship is not taxable.

However, if you cash in a life insurance policy, then a portion, if not all of it, is likely taxable.

Money you receive from a life insurance policy when someone dies is not taxable.

TurboTax can help you determine what should be included in your return. Under certain circumstances, the following items may be nontaxable.

Money that is reimbursed from qualifying adoptions.

Alimony payments (for divorce decrees finalized after 2018).

Cash rebates on items you purchase from a retailer, manufacturer or dealer.

The following items are deemed nontaxable by the IRS: Nontaxable income won’t be taxed, whether or not you enter it on your tax return. This can include the remaining amount of a debt or loan that is canceled, employer contributions to an unqualified retirement plan, and sickness, injury, and disability retirement payments from an employer-paid plan.

Money from a qualified scholarship isn't taxable, but if you use the money for room and board or to pay other personal expenses, that portion is normally taxable.

Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.

Unemployment compensation generally is taxable.

Income received as wages, salaries, commissions, rental income, royalty payments, stock options, dividends and interest, and self-employment income are taxable.

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