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Not all payments are classified as compensation. For instance, gifts, inheritances, and certain types of support do not fall within this category. Knowing what is not considered compensation helps distinguish between taxable income and other financial benefits.
Compensation income includes various types of earnings an individual receives in exchange for their work. This can encompass wages, commissions, performance bonuses, and certain benefits from an employer. Understanding what counts as compensation income is crucial for accurate tax filing and financial planning.