What type of compensation is excluded from Denise’s total taxable income?

Child support is excluded from Denise’s total taxable income because it is not considered taxable income under the Internal Revenue Code. The IRS treats child support payments as a financial obligation owed by the non-custodial parent to support their child or children. Unlike alimony, which is taxable to the recipient and deductible by the payer for divorce agreements executed before 2019, or jury duty pay, which is taxable, child support payments do not need to be reported as income when received. This distinction is important as it directly affects the recipient's tax liability and financial planning.

In contrast, options like alimony, jury duty pay, and IRA contributions potentially involve amounts that could affect taxable income. Alimony payments received are included in taxable income for the recipient, jury duty pay must be reported as income, and while traditional IRA contributions may provide a deduction, they are considered adjustments to gross income rather than an exclusion from taxable income. This clarity is crucial for understanding how different forms of income and transfers are treated under tax law.