Many people think they have filed their taxes correctly when, in fact, they haven’t. Many taxpayers believe the income from tips, commissions, awards and side jobs are not counted by the IRS. So what exactly is taxable by the IRS, so taxpayers can correctly file their taxes this season? Tax Defense Network answers this question below.
Tax Defense Network Salary: What Is Taxable?
Everyone understands that wages, salaries, dividends, and interest are taxable, but many do not know that extra tips, commissions, bonuses, side jobs, awards and prizes, gambling proceeds, and barter exchanges of goods or services are also taxable. The IRS requires taxpayers to pay taxes on all income from any source, inside or outside the country. Only those taxpayers who are exempted from paying taxes from some income sources can enjoy the privilege.
Tax Defense Network wants to bust the myth that self-employed taxpayers do not need to pay taxes if their income is less than $600 per job. The truth is that the IRS does not consider a minimum amount that a taxpayer may leave out from gross income. Any amount of income is taxable. Even if a taxpayer has a full-time job, any income from any other source or from a side job is considered self-employment income and must be reported to the IRS. If a self-employed taxpayer’s net profit exceeds $400 a year, s/he will need to prepare Form 1040 Schedule SE.
Tax Defense Network Salary: Income from Side Jobs & Gambling
Those who babysit, cut lawns, clean houses, or any other side job should pay taxes on the income earned. Additionally, many taxpayers believe winnings from gambling are not taxable, but the truth is that any winnings from gambling, horse races, raffles, casinos, tournaments, or lotteries are taxable. Any losses can be deducted from the winnings. Taxpayers must remember to keep the receipt of winnings to help them file taxes accurately.
Tax Defense Network Salary: Prizes and Awards
Prizes and awards are not exempted from taxes either. Cash winnings on television shows, beauty contests, car prizes, or trips are also taxable. Along with reporting any extra income from any source to the IRS, taxpayers are also required to report the fair market value of the products won as prizes. It takes away some of the shine from the winnings, but laws are meant to be followed.
Taxpayers must ensure that they file all taxes that are required to be filed to avoid getting into tax debt. Tax Defense Network believes that information about what is taxable can resolve most doubts of taxpayers and help them in filing taxes correctly.