Federal tax returns are due in about two months. If you work a job that takes care of income withholding throughout the year, chances are good that your taxes will not be very complicated. If you are an independent contractor or run your own business, however, filing a return can be more of a headache.
What most Americans don’t realize is that the IRS wants you to report all income you receive, not just work wages. In case you didn’t already dislike the IRS, here are some unusual sources of reportable and taxable income:
- Any item you sell second-hand that results in a financial gain (selling for more than your purchase price)
- Any gambling or lottery winnings
- Any prizes or awards you earn, even if money is not part of the prize package
- The cash value of any non-cash prizes (tax on a car you won in a raffle, for instance)
- Tips you receive at work
- Payment for any odd jobs which are usually paid in cash (babysitting, etc.)
- The market value of bartered services (swapping favors with a friend)
- The market value of bartered or traded goods (swapping DVDs, for example)
- The value of forgiven debts (called “cancellation of debt”)
- Any valuable items or cash that you happen to find (buried treasure may not be so lucrative after all)
The silver lining here is that, for many of these odd income sources, the IRS must rely on the honor system. In other words, there is no easy way for the IRS to find out that you didn’t report the winnings of your basement poker game.
On a more serious note, if you do find yourself facing an audit or other IRS actions after filing this year’s return, please don’t go through it alone. Having an experienced tax law attorney by your side will ensure that you are treated fairly and that your rights are not violated.