There are many types of income that do not qualify to be taxed
. The most common example of this is welfare benefits. Payments received for child support are also tax-free. However, the deduction is restricted in respect to sums received through a program for dependent care.
Insurance payments upon the death of a person do not collect tax. Tax Relief is also available for payments received after a personal accident as well as payments under a health insurance policy. If you have a medical savings account and withdraw from it to pay for medical expenses, no tax is required to be paid on withdrawals.
There is tax relief for compensation received under the Workmen's Compensation Act for illness or injury. Benefits received from the government by veterans are also tax-free. The payments made by the department of defense under their program for the assistance of homeowners are also entitled to tax relief. The gratuity payment to the family of a deceased military member is also not taxable.
If you receive property by way of gift or if you inherit property, you may not have to pay taxes, though the relief is subject to certain limits and conditions.
Distributions made by Roth IRA funds are also not taxed, but are subject to conditions. If you receive a scholarship or a grant connected to education, you may not have to pay a tax on the amounts, but there may be some exceptions.
Publication 525 from the IRS contains detailed information on the subject and should be referred to in case of doubt. The tax-free incomes should be excluded by you when calculating your total income. When you do this, you may find that you don't need to file a return at all.