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Taxes

Tax Returns

13 Weird Things the IRS Considers Taxable, From Bribes to March Madness Pools

Woman surprised by what she is being taxed on

Eddie Lee / Money; Getty Images

Accept any bribes or rob any banks lately? If so, and you don’t report it as income, you can add tax evasion to your list of illegal activities.

The long arm of the IRS extends beyond your paychecks. It may be obvious to everyday taxpayers that they must report their wages, but few likely realize the feds also expect a cut of their profits from more under-the-radar ways of accruing income, like from crypto investments, crimes and even jury duty.

As the April 18 tax filing deadline approaches, don’t get caught leaving any of these 13 offbeat items off your tax return:

Bribes and kickbacks

It may seem counterintuitive to tell the government about your clandestine backroom deals, but the IRS says they're taxable. In Publication 525, the agency specifically mentions that it considers kickbacks, side commissions, push money and the like as self-employment activity and expects you to report it on a Form 1040.

Babysitting earnings

The pocket money you earned watching your neighbor’s kids on a Friday night is taxable. Even if you only babysat periodically in 2022, the IRS considers you a childcare provider. (This may be particularly relevant for teenagers, who as dependents generally need to file taxes if they earned more than $12,950 at work or more than $400 through self-employment.)

Jury duty pay

It’s not bad enough that you got called for jury duty, according to the IRS: You may also owe money on the pay you receive for serving as a juror. If you had to give your jury duty earnings to your employer because it continued to pay your salary while you were in court, the agency says to deduct the amount you paid your employer as an adjustment to income.

Drug dealing and criminal activity

Gangster Al Capone reportedly once said, “They can’t collect legal taxes from illegal money.” Of course, that’s before he was sentenced to 11 years in prison for failing to file taxes on his illicit earnings. The IRS considers profits earned through illegal activities self-employment and expects you to report your misdeeds as income.

March Madness prizes

Celebrating a bracket win from your office’s March Madness pool? That's taxable, the IRS says. Any winnings from fantasy sports leagues, the casino, and even non-cash prizes from lotteries and raffles are considered taxable. You can, however, deduct losses up to the amount of your winnings if you itemize.

Scholarships

A qualified scholarship or fellowship for tuition and related expenses like books, as well as scholarship prizes won via contest, aren't taxable. But if you're using the money to cover incidental expenses like housing and travel, you have to report that on a Form 1040.

Etsy and eBay earnings

Selling your handmade jewelry online makes you a small business owner, and the IRS says you need to report your earnings as such. You don’t owe taxes on sales from old collectibles if you’re selling them as a hobby and don’t make a profit. But be it stamp collecting or spinning pottery, if you do make additional income from your hobby, you have to report it. (The IRS outlines nine factors to determine whether your hobby is also a business.)

Crowdfunding

Did you raise money on Kickstarter for a Shark Tank-worthy idea? You might owe money to the IRS for that funding, as the funds are considered income. Make sure to keep good records of any money you raise.

Unemployment benefits

State and federal unemployment income you receive is generally taxable. That includes disability income used as a supplement for unemployment, railroad unemployment compensation, and benefits for unemployment that qualifies for disaster relief.

Payments linked to the Gulf oil spill

Speaking of unemployment benefits, if you received payments for lost wages, property damage or physical injury caused by the Deepwater Horizon oil spill of 2010, you may owe taxes.

Free travel tours

The IRS says the free tour you earned from a travel company for organizing a group of tourists is considered income. Calculate its value and include it on your 1040. You aren’t allowed to deduct your expenses for serving as a volunteer leader of a travel group, either.

Found property

The Goonies owed the IRS money for the lost treasure they found. The IRS considers found property that doesn’t belong to you, such as a “treasure trove,” taxable to you in the first year it’s in your possession.

Virtual currency

The IRS views crypto as property, meaning investors must pay taxes on capital gains (investment profits). Crypto airdrops and income from crypto mining are also taxable.

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