Hurricane Katrina relief provisions. 

At the time this publication went to print, Congress was considering legislation that would provide additional tax relief for individuals affected by Hurricanes Katrina, Rita, and Wilma. For more details, and to find out if this legislation was enacted, see Publication 4492. The Katrina Emergency Tax Relief Act of 2005 provides tax relief for persons affected by Hurricane Katrina. Some of the provisions are covered in this publication. For information on other provisions, see Publication 4492. Canceled nonbusiness debt. If you qualify, you can exclude from income the amount of a canceled nonbusiness debt. See Exceptions, under Canceled Debts. Mileage reimbursements to charitable volunteers. You can exclude from income amounts you receive as mileage reimbursements from qualified charitable organizations for the use of a private passenger automobile and for the benefit of the organization in connection with providing relief related to Hurricane Katrina. The amount you can exclude from income can be up to the standard business mileage rate. See Volunteers, for more information.

Donation of accrued leave. If your employer has adopted a leave-based donation program to aid victims of Hurricane Katrina, you can elect to give up vacation, sick, or personal leave in exchange for cash payments your employer makes to a qualified organization. These payments are not included in your income. For more information, see Donated accrued leave under Employee Compensation.

Disaster mitigation payments. You can exclude from income grants you use to mitigate (reduce the severity of) potential damage from future natural disasters that is paid to you through state and local governments. If you reported income from qualified disaster mitigation payments in previous years, you may be able to file a claim for refund. For more information, see Disaster mitigation payments under Welfare and Other Public Assistance Benefits.

Nonqualified deferred compensation plans. Generally, all amounts deferred under a nonqualified deferred compensation plan for all tax years are included in gross income for the current year, unless certain requirements are met. See Nonqualified deferred compensation plans, under Employee Compensation.

Elective deferrals. The limit on the amount of your wages you can elect to defer into certain retirement plans (such as section 401(k) plans) increases each year through 2006. If you are age 50 or older, you may be able to make additional catch-up elective deferrals. See Elective Deferrals in the discussion on retirement plan contributions under Employee Compensation.

Terrorist attacks. You can exclude from income certain disaster assistance, disability, and death payments received as a result of a terrorist or military action. For more information, see Publication 3920, Tax Relief for Victims of Terrorist Attacks. Astronauts. You can also exclude death payments for astronauts dying in the line of duty after 2002.

Foreign income. If you are a U.S. citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. For details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

You can receive income in the form of money, property, or services. This publication discusses many kinds of income and explains whether they are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. It also includes information on disability pensions, life insurance proceeds, and welfare and other public assistance benefits. Check the index for the location of a specific subject.

Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return but is not taxable.