10 Things You Didn't Know You Had to Pay Taxes On
Every April, Americans have to file tax returns reporting their income. For most people, this means salaries, wages, and—if you're lucky—interest, dividends, and capital gains from your investments.
We tend to forget about them, but there are a ton of other things that are supposed to be included when you round up the year's income. It's up to you to report them, but not everyone does.
Every year the government loses an estimated $270 billion from underreported income from sources like gambling winnings or proceeds from an occasional eBay sale. Although most people don't get caught, it's a good idea to follow the rules, just in case you get audited.
Here's a list of 10 things that you technically have to pay taxes on. It's by no means exhaustive—if you want that you can look over the IRS's lengthy "Other Income" publication.
1. Stuff you sell
If you sell something on eBay, Craigslist, or to your friend, your profits are income and therefore taxable, according to the IRS. But it's not quite that simple. If you bought a car and you sell it for less than you paid, you're actually taking a loss—you don't have to pay taxes because you don't have any income here. But if you're making money eBay or Craigslist, you're supposed to declare that income.
2. Bartered items and services
Sometimes bartering is just easier; you exchange one service for another without using currency. The IRS, however, says you still have to pay taxes when you barter. By law, both sides of the transaction are obligated to report the "fair market value of the goods and services." For example, if instead of a $50,000 salary, you elect to be paid with a fancy car that is worth $50,000—effectively bartering your services and time for the car. While it may seem like a loophole, it isn't: You have to pay taxes on $50,000.
3. Gambling winnings
"Gambling winnings are fully taxable and you must report them on your tax return," says the IRS. If you win, you have to fill out a special W-2 form, called the W-2G, and report your winnings on your 1040. But like the selling stuff rule that exempts you if you're coming out in the red, you can deduct losses from the winnings on your Schedule A. So if you're itemizing your deductions and lost more than you won in a year, you don't have to pay any taxes on the times you got 21.
4. Unemployment income
If you're on unemployment, you have to report that benefit as income when tax time comes around. In fact, the government sends a Form 1099-G to let you know how much you received.
5. Forgiven debt
People lucky enough to have their debts forgiven have to pay taxes on that balance in many cases, since it directly affects their bottom lines. The IRS does list plenty of exceptions, however. For example, if the debt was canceled as a gift, that's subject to the gift tax rules, and every year a person can give anyone as much as $14,000 without triggering gift taxes.
6. Airbnb rentals
Airbnb income is income. Local and state taxes depend on your jurisdiction, but if you rent a room or your residence for more than 14 days in a year, you generally owe taxes. But if you do, you can also deduct certain housing expenses, reducing your tax bill.
If you pay alimony, the IRS says you can deduct it, and if you receive it you have to report it as income—and pay income taxes on it. However, not all money exchanged between exes counts as alimony. If the payments are on other terms you might be in luck.
Scholarships are complicated. Essentially, if you are given a scholorship for tuition, enrollment fees, and course-related expenses, you don't have to pay taxes on it. However, if it's for other stuff like room and board or is given as payment for work (work-study, for example) it's likely taxable. The IRS has a nifty worksheet that helps you figure out if your scholorship is taxable.
Regardless of whether you consider Draftkings to be gambling or not, it's still income and therefore taxable, which is why you have to submit a W-9 if you play. According to the company, players who make more than $600 will receive a 1099-MISC, but even if you made less than that you still have to pay—it's just on you to track it without the form.
10. Buried treasure
Found property such as a chest of prime pieces of eight are unfortunately taxable in the year they are first found, according to the IRS. Interestingly, however, a pirate who is missing his or her buried treasure could write off the literal loss as a business loss, if the business was legitimate.