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Publication 554

Other Items(p19)

The following items generally are excluded from taxable income. You should not report them on your return, unless otherwise indicated as taxable or includable in income.

Gifts and inheritances.(p19)

Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income also is taxable to you. If the gift, bequest, or inheritance is the income from property, that income is taxable to you.

Veterans' benefits.(p19)

Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). See Publication 525.

Public assistance benefits.(p19)

Other items that are generally excluded from taxable income also include the following public assistance benefits.
Welfare benefits.(p19)
Do not include in your income benefit payments from a public welfare fund based upon need, such as payments due to blindness. However, you must include in your income any welfare payments that are compensation for services or that are obtained fraudulently.
Payments from a state fund for victims of crime.(p19)
Do not include in your income payments from a state fund for victims of crime, if the payments are in the nature of welfare payments. Do not deduct medical expenses that are reimbursed by such a fund.
Home Affordable Modification Program (HAMP).(p19)
If you benefit from Pay-for-Performance Success Payments or PRA investor incentive payments under HAMP, the payments are generally not taxable. For more information, see Publication 4681.
Mortgage assistance payments.(p19)
Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Interest paid for the homeowner under the mortgage assistance program cannot be deducted.
Also, mortgage payments provided under the Department of Housing and Urban Development's Emergency Homeowners' Loan Program (EHLP), state housing finance authorities receiving funds allocated from the Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets (HFA Hardest Hit Fund), or other similar state programs receiving funding from EHLP are excluded from income. Interest paid for the homeowner under the EHLP or the HFA Hardest Hit Fund may be deductible. See Form 1098-MA, Mortgage Assistance Payments, and its instructions for details.
Payments to reduce cost of winter energy use.(p19)
Payments made by a state to qualified people on the basis of need to reduce their cost of winter energy use are not taxable.
Nutrition Program for the Elderly.(p19)
Food benefits you receive under the Nutrition Program for the Elderly (now known as the Nutrition Services Incentive Program) are not taxable. If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you also are eligible for food benefits.
Reemployment Trade Adjustment Assistance (RTAA).(p19)
Payments you receive from a state agency under the RTAA must be included in your income. The state must send you Form 1099-G to advise you of the amount you should include in income. The amount should be reported on Form 1040, line 21.

Persons with disabilities.(p19)

If you have a disability, include in income compensation you receive for services you perform unless the compensation is otherwise excluded. However, do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. These amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work.


Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)).

Old-age, survivors, and disability insurance benefits (OASDI).(p19)

OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. This applies to old-age insurance benefits, and insurance benefits for spouses, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment.