5 Unusual Types of Income to Include on Your Taxestax tips | February 22, 2019 | By Susannah McQuitty
As you sit down to e-file your taxes this year, reporting the money you earned over the last 12 months is usually pretty straightforward at first: You get your W-2 from your employer, or a 1099-MISC from a client, and the filing process kicks off as you transfer numbers from mailed-in forms to your online tax return.
But what about the income you earned that didn’t come with paperwork? And is there any type of income that doesn’t need to be reported?
Let’s look at a few commonly overlooked income sources that you should include when you e-file.
First of all, any money that you make for services rendered—whether from waitressing, babysitting, dog walking, or writing for your friend’s blog—counts as earned income and should be reported on your tax return (“under-the-table” income and cash payments included).
Odd jobs that you do independent of an employer are technically considered self-employment gigs. At the end of the year, add up all the odd-job income and expenses and report them on an IRS Schedule C. Closely related jobs can be grouped together on one Schedule C, but unrelated jobs must be reported on separate Schedule Cs.
Once that’s finished, net all of your Schedule C earnings: If the total is more than $400, you’ll owe self-employment tax on that profit (also called net earnings). If your total profit is less than $400, you won’t owe self-employment tax, but you must still report that business income and pay income tax on the amount. You can read more about self-employment taxes in our Tax Guide.
Tips greater than $20 should be reported to your employer by the 10th of each month so that your employer can withhold the necessary taxes for Social Security and Medicare (which helps protect you from a giant tax bill in April).
But what if this is news to you, and you haven’t been reporting tips all year? Time to bust out your personal records, then: All tip income should be reported on your tax return, so even tip income that you didn’t report throughout the year should be filed on Form 4137, Social Security and Medicare Tax on Unreported Tip Income.
In the same vein, kids who earn money may also need to file a tax return. The minimum income threshold to file a tax return is $12,000 for single filers, which means that if your kid earned less than $12,000 during the year, they don’t have to file a tax return—unless, of course, they earned more than $400 of profit from odd jobs.
If your child operates their own business independent of an employer (mowing lawns, babysitting, etc.), the rules for self-employment taxes listed in the last section still apply.
Even if your kid isn’t required to file a tax return, it may still be beneficial if any taxes were withheld from their paycheck by an employer; those withholdings (or a portion of them) could be given back to your child in a refund.
So how would you be able to tell? Use 1040.com and see if filing would result in a tax refund (you can walk through the filing process for free and sum up the situation before actually e-filing the return).
Note: There is also tax for unearned income from investment interest or other account holdings—so even if your child isn’t out there earning income for goods or services, you may still need to file a tax return in your child’s name. You can read more about kids and taxes on our Tax Guide page.
Cashing in on your bets from the latest game? Don’t forget to keep your records handy when you file your taxes. You’ll need to report the winnings as “other income,” but you may also need to pay taxes on those winnings.
Any gambling winnings that are both 300 times what you bet and over $600 are subject to a 25% tax rate (eek!). You may receive a Form W-2G in the mail from the gaming organization (a form that details how much was awarded to you), but even if you don’t, you’re legally responsible to report the amount of your winnings and pay whatever tax you may owe.
If you have any checks lying around from side-hustle work that you simply haven’t cashed or deposited yet, make sure you check the date for when it was written. You may need to include that income on your taxes when you file, even if the money hasn’t quite made it to your pockets yet.
Checks that are made to you for goods and services and dated in the tax year technically count as income for that year, even if you don’t deposit them until the following year.
File with 1040.com
No matter your finances, filing your taxes is easy when you use 1040.com. We’ve got an eye out for odd income sources, but instead of overwhelming you with options, we’ll walk you through the numbers a little at a time and prompt you to check your records for any missing information. Sign up now and we’ll get you started!