Benjamin Franklin so aptly declared hundreds of years ago the inevitability of death and taxes, and recently Kiplinger shared even more taxable areas that you might not have been aware of.
I think most of us grasp the concept of paying taxes on our earnings whether they come from passive or active income; however, there are apparently a number of other areas where Uncle Sam can lay claim to what we have accomplished.
If you click on the Kiplinger link above you’ll find the full list; however, I wanted to highlight a few areas that kind of blew my mind:
Winnings from a fantasy sports league. How many of us even have the opportunity to claim any winnings on our fantasy sports leagues year in and year out; however, anything that you do win, you must file, especially if it is through a commercial website.
According to the article, if you receive money through a commercial site, they must provide you with a 1099-MISC to report your earnings. If you are one of those people who think you can throw this file away, think again. When a company issues a 1099-MISC to an individual, they must also file it with the federal government. So you may think you have pulled one over on Uncle Sam; however, he is just waiting for you to acknowledge it in return.
Lesson: Only participate in fantasy sports leagues with friends you know and where all of the income is not declared and flies below the radar. You may miss out on bigger pools of money by doing this, but you also save lots of money by avoiding tax payments.
The donation of eggs for fertility purposes. Yes, you may think you are doing something for the greater good and every last dollar is earned by you for your pain and suffering; however, fertility clinics are required to send you a 1099 which is thus in turn received by the government.
I could say a number of things about lessons learned here and best practices for donating eggs without tax implications; however, I will just leave this point with a warning for you to plan for a tax payment if you choose to give a part of yourself to someone else. Apparently, Uncle Sam will expect his fair share as well as this other couple.
Stolen property. I was surprised that stolen property was even mentioned…after all, if it’s stolen, who is going to record it as “found” to the US government; however, there is a specific part of the tax code that declares that income derived from illegal activity such as drug dealing needs to be included on your 1040 as part of income.
I can’t imagine many drug dealers including their income derived from the activity as part of their 1040; however, it is important to note that most crime bosses seem to go down for tax evasion issues more than the crimes, so hopefully you will keep this in mind when you file your taxes this year, especially if you’re “developing new business opportunities.”
Have you ever had to pay taxes for something surprising? If so, what was it?