Yes! These Things May Be Taxable

You already know that your wages are taxable. Here are some other things that may be taxable.

1. Scholarships – If you receive a scholarship to cover tuition, fees, and books, you don’t have to pay taxes on the money. But if your scholarship also covers room and board, travel, and other expenses, that portion of the award is taxable.

2. Gambling Winnings – The IRS expects you to report your gambling proceeds on your tax return even if you do not receive a W2-G. If you itemize, your gambling losses are deductible, but only to the extent of the winnings, you report as income.

3. Unemployment Benefits – Unemployment benefits are a form of income, and that income is taxable at the federal and, in some cases, the state level.

4. Cancelled Debt- debt that is canceled or otherwise discharged for less than the amount you owe is generally treated as taxable income.

5. Stolen Property -Income from illegal activities, such as money from dealing illegal drugs, must be included in your income. Bribes are also taxable.

6. Buried Treasure – According to the IRS, found property is taxable at its fair market value in the first year it’s your undisputed possession.

7. Gifts from Your Employer – More than 50 years ago, the Supreme Court ruled that a gift from an employer can be excluded from the employee’s income if it was made out of “detached and disinterested generosity.” Gifts that reward an employee for his or her services don’t meet that standard, the court said. Gifts that help promote the company don’t meet that standard, either.

8. Bitcoin – Bitcoin—along with other cryptocurrencies—to be an asset. If the bitcoin you used to make a purchase is worth more than you paid for it, you’re expected to pay taxes on your profits at capital gains rates—just like stocks and bonds.

9. Bartering – When you exchange property or services instead of cash, the fair market value of the goods and services are fully taxable and must be included as income on Form 1040 for both parties. However, an informal exchange of similar services on a noncommercial basis, such as carpooling, is not taxable. You should expect to receive a Form 1099-B (or a similar statement) in the mail.

10. Payment for Donated Eggs – Every year, thousands of young, healthy women donate their eggs to infertile couples and receive payment in exchange. Every year, thousands of young, healthy women donate their eggs to infertile couples.

11. Prizes Like The Pulitzer Prize and The Nobel Prize – If you were selected for this prestigious honor—worth more than $980,000 in 2020—you must pay taxes on it. The only way to avoid a tax hit is to direct the money to a tax-exempt charity before receiving it.