11) Amounts withdrawn from Qualified Tuition Plans are tax-free if the amounts are used for qualified higher education expenses including tuition, fees, books, and room and board for students attending on at least a half-time basis.
12) Any distribution from a Qualified Tuition Plan not used for qualified higher education expenses is both included in income and subject to a 10% penalty.
13) While payments received because a person has been physically injured are excluded from gross income, payments on account of non-physical injury must be included in gross income.
14) Awards for emotional distress attributable to a physical injury are excluded from gross income.
15) Punitive damages are taxable unless they are awarded for physical injuries.
16) Amounts collected under accident and health insurance policies purchased by the taxpayer are excludable from income.
17) Katie, a self-employed CPA, purchased an accident & disability insurance policy. As the result of an auto accident, Katie was unable to work and received $3,000 of disability benefits per month for seven months. The benefits were based on her estimated monthly income and should be reported as gross income.
18) John, an employee of a manufacturing company, suffered a heart attack and was unable to work for six months. He received $1,500 per month of disability benefits as a result of an employer-provided group policy. The benefits are includible in John's gross income.
19) Payments received from a workers' compensation plan are taxable.
20) Premiums paid by an employer for employee disability coverage are excluded from the employee's gross income.