The standard federal items you’ll see taken out of your paycheck are called FICA, or taxes for the Federal Insurance Contributions Act.
That money goes into Social Security (6.2% of your pay) and Medicare (1.45%). Most states also have an income tax you’ll see come out of your wages.
There are, however, some downright weird and surprising things the IRS collects taxes on that make it hard to keep more money in your wallet.
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Crime might pay in the short term, but the IRS still collects taxes on it.
Even if you’re not using legitimate ways to earn extra money, the IRS still wants you to report it. That includes “kickbacks, side commissions, push money, or similar payments.” They go on your Schedule 1.
There are plenty of reasons for your debt to be canceled, such as bankruptcy, defaulting, loan forgiveness, or even a settlement.
The ringer is that unpaid debt is treated as income by the IRS. You can expect to receive a Form 1099-C from the creditor because it's your responsibility to provide accurate information during tax time.
Cryptocurrency, like Bitcoin, though existing in the digital realm, demands real-world tax obligations.
The IRS categorizes digital assets as property, not currency, requiring reporting for sales and exchanges. Despite their intangible nature, these assets hold tangible tax implications that taxpayers must address.
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The IRS doesn’t particularly care how you made your money, but it does want you to report your earnings.
The agency is serious about taxpayers reporting income from illegal activities on Form 1040. That includes activities like drug dealing and other illicit deeds.
While statistics on the number of people disclosing crime-based income are unavailable, the IRS mandates the inclusion of such earnings in tax filings.
Bonuses for being an excellent employee can be just as excellent — but they can come back to bite you.
The IRS mandates reporting them as income, subjecting them to taxation. This applies to non-cash bonuses, including perks like vacations.
Employee achievement awards, governed by distinct rules, often qualify for income exclusion, presenting a different tax treatment than regular bonuses.
Having a victorious season in your fantasy football league might bring virtual glory, but it can also lead to tax obligations.
The IRS treats earnings from fantasy sports leagues as gambling winnings, subject to taxation. However, if you itemize, you can deduct gambling losses up to the amount of your winnings.
Maybe you don’t trust the American banking system, so you decided to stash some gold away from prying eyes. Bad news: You still need to pay taxes on it because it’s considered collectible.
If you sell those precious coins you’ve been hanging on to, you’re likely looking at a maximum tax rate of 28%.
You might need to pay capital gains taxes if you sold your home, depending on whether you exceeded your profit limits or don’t qualify for an exemption.
You can exclude $250,000 ($500,000 for joint filers) from home sale profits. To qualify for the exclusion, you must meet the IRS’s ownership and use tests: You must have owned the residence and used it as your main home for two years out of the five years before the sale.
Accounts you have that earn interest — which you can pull money from — may be taxed.
Dividends on deposits or share accounts in certain financial institutions are considered taxable interest. Interest earned on Treasury bills, notes, and bonds is subject to federal income tax but is exempt from state and local income taxes.
Look for a 1099-INT. Your bank statements should also show how much interest you’ve earned.
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Whether you view a jury duty summons as an inconvenience or a civic duty, the income you receive during your time in the courtroom must be reported.
However, if you're required to reimburse your employer for the pay it continues to provide during that period, it becomes deductible.
Social Security benefits
Let’s say you spent decades paying into Social Security through FICA taxes. When you collect Social Security later in life, those taxes go away, right? Nope.
Up to 85% of your Social Security benefits can be taxes if you file as an individual with an income surpassing $25,000 or jointly with your spouse if the income exceeds $32,000.
If you’re married and filing separately, you’re probably still subject to taxes on your Social Security benefits.
Tickets you resold
If you made money reselling tickets for concerts or sporting events, you might owe the IRS, even if you don’t get a Form 1099-K from a third-party payment app. You must still report the income if you’re running a business reselling tickets.
Luckily, the IRS decided to delay the new $600 profit threshold for the 2023 tax year, which may have affected more people.
However, starting with the 2025 tax year, you’ll need to report and pay taxes on amounts over $600 (the threshold is $5,000 for the 2024 tax year), so keep track of any profits you make throughout the year.
Avast, ye federal agents.
Discovering a treasure trove of booty is certainly a delight, but the IRS will want a piece of it. Anything you find that was “lost or abandoned” can be taxed at the fair market value of said goodies.
Many banks offer sign-up bonuses for new checking or savings accounts. But be wary: You’ll want to set aside part of that bonus for tax season.
You might get a 1099-INT or a 1099-MISC. You might not get any form. But the IRS will still consider it income, so you need to report it. On the positive, the IRS does not treat credit card sign-up bonuses as income, so you don’t need to report those.
Each area carries distinctive tax implications, from bank bonuses and bribes to canceled debt and digital currencies.
Even illicit income, like drug deals, and unexpected windfalls like treasure finds aren't exempt. Fantasy sports winnings, home sales, and resold tickets also fall under the tax umbrella.
Understanding these peculiar tax obligations ensures you won’t get caught by surprise come tax time. Pretty much anything you do to get ahead financially, the IRS probably wants to know about it.