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December 17, 2019 | Posted in:

I Owe Tax on That? 4 Surprising Taxable Items

Wages and self-employment earnings are taxable, but what about the random cash or financial benefits you receive through other means?

If something of value changes hands, you can bet the IRS considers a way to tax it.

Here are four taxable items that might surprise you.

 

1. Scholarships and financial aid

Applying for scholarships and financial aid are top priorities for parents of college-bound children. But be careful – if any part of your child’s award goes towards anything except tuition, it might be taxable.

 

2. Gambling winnings

Hooray! You’ve hit it big in your fantasy sports league. But guess what? Technically, most gambling winnings are taxable, including casino games, lottery tickets and sports betting. Thankfully, the IRS allows you to deduct your gambling losses as an itemized deduction, so keep good records.

 

3. Unemployment compensation

Unfortunately, the IRS doesn’t give you a break when you are unemployed, as unemployment compensation is taxable. If you are collecting unemployment, you can either have taxes withheld and receive the net amount or make estimated payments to cover the tax liability.

 

4. Crowdfunding

A popular method to raise money for new ventures or to support a special cause is crowdfunding online. Whether or not the funds are taxable depends on two things: your intent for the funds and what the giver receives in return. Generally, funds used for a business purpose are taxable and funds raised to cover a life event (e.g. special causes or medical assistance) are considered a gift and not taxable to the recipient.

 

Author:

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