Often times, taxpayers don’t include certain types of income because they don’t believe it’s taxable or that they don’t need to because the amount is so minute. All income is taxable and it has to be reported on your tax return. Below is a list of some of the most commonly missed sources of income.
Unemployment benefits are taxable. If you get unemployment, you will receive a 1099-G Form from the IRS at the beginning of the year. If your unemployment benefits came from non-union funds that you contributed to, the amount that exceeds your contribution can be taxed. The American Recovery and Reinvestment Act made it possible for the first $2,400 of unemployment benefits to be tax-free.
Gambling winnings are taxable and have to be reported on your tax return. Casino, lottery and horse and dog track winnings must all be included. Cash winnings and the market value of other non-cash prizes are also taxable. If you win cash and prizes on a game show, or any other contest, the market value of the prize is considered taxable income.
Performance-based bonuses that are given by employers are taxable. Cash, gift cards, trips, and property are considered taxable. If you receive a bonus in the form of goods or services, the market value of those goods or services is taxable, so are holiday bonuses.
If you are awarded damages by the court for pain and suffering or money loss, this money is not taxable. Punitive damages (the excess of your loss) is taxable.
If your employer reimburses you for business expenses, you will have to pay taxes on it, however, you can take deductions on the expenses you incurred for business expenses to begin with, so there is still an upside.
Severance pay or payment at the end of employment, when a contract was signed, is taxable income.
For more information about taxable income, contact a tax professional or visit www.irs.gov.
