We all know there are certain items you always pay tax on: your income, your home and your investments. But there are plenty of things that aren’t as crystal clear and you might not know about.
Here are some of the most important ones to know so you’re able to file your taxes correctly. Also check out a few steps to take to make filing easier next year.
Unemployment benefits: This government assistance can be invaluable when you’re going through difficult financial times, but just know the support is often taxable income.
Gifts and inheritance: In many cases, gifts and inheritances are considered taxable income and may be subject to estate or gift taxes.
Jury duty pay: In some jurisdictions, the money you receive for serving on a jury is considered taxable income.
Bartering: If you exchange goods or services with someone without using currency, the value of those goods or services may be considered taxable income.
Employee discounts: If your employer offers you a discount on their products or services, that discount may be considered taxable income.
Canceled debts: If a debt you owe is canceled or forgiven, the amount of the canceled debt may be considered taxable income.
Award shows and contests: If you win a prize in a contest or award show, the value of that prize may be considered taxable income.
Income from virtual currencies: If you earn income from virtual currencies such as Bitcoin, it is considered taxable income.
Sale of collectibles: If you sell a collectible item, such as a rare coin or stamp, the profit you make from the sale may be considered taxable income.
Life insurance payouts: If you receive a payout from a life insurance policy, it may be considered taxable income.
Business meals and entertainment: If you’re an employer and you provide meals or entertainment for your employees, the cost of those meals or entertainment may be considered taxable income for the employees.
Gambling winnings: If you win money from gambling, it is considered taxable income. If you choose to itemize your deductions, your gambling losses may be deductible, but only up to the amount of your reported winnings.
Employee perks: If your employer provides you with perks, such as a company car or a gym membership, the value of those perks may be considered taxable income.
Alimony payments: If you receive alimony payments, they are considered taxable income.
Legal settlements: If you receive a legal settlement, the amount you receive may be considered taxable income.
Scholarships: If a scholarship is awarded to you to cover tuition fees, books and other related expenses, you are not required to pay taxes on those funds. However, if the scholarship also includes additional costs such as housing, transportation or other miscellaneous expenses, that portion of the scholarship is considered taxable income.
Illegal Activity: Technically, even income earned from illegal activities such as drug dealing or theft must be reported. Some activities that are legal in some states, such as marijuana sales, are against federal law. In general, this is likely one of the least-observed tax regulations.
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