IRS wants to remind you that just about everything is taxed. Sure, your paychecks get totaled on your Form W-2 and winds up on your tax return. But income to the IRS means income from all sources. As you get organized for the annual drudgery of filing taxes, don’t forget about some of the odder ones.
If you sell unwanted cars, furniture, or even family heirlooms, any gain is taxable. If you sell something for $100 you bought for $50, that’s a $50 gain. If you can’t prove your basis, IRS will view the whole $100 as income. Maybe its capital gain, but it’s still income.
you are paid in cash to baby sit for your neighbor, take a friend to the airport, or water your uncle’s garden, it’s taxed. If you trade favors but don’t swap cash, IRS says each of you is taxed at the market value of the goods or services. Barters and trades are taxed.Even swapping tickets of even value can trigger tax. Selling for cash certainly does. The fact that scalping may be illegal is no excuse. Same for any other illegal activity. Income is income. Remember, they got Al Capone for tax evasion, not murder.
Gambling winnings are taxed too. If you hit the jackpot or win the lottery, it’s all taxed. Taxes are one of the main reasons some people choose to take annual payments when they have that choice. A lump-sum payout can generate a big tax bill.
Prizes and awards are taxed, even if you win a Nobel. They are taxed even if you don’t win cash. If you buy raffle tickets and win a car, the cash value of the car is taxed.