On the surface, filing your tax return seems like it should be straightforward. You report how much you make–your income–and you calculate how much tax you owe. But, what if you have income that doesn’t fall into the standard wage format. Do you still have to report it? Yes, you do!
In order to abide by all tax laws and to stay in good standing with the IRS, it’s vital to report all of your taxable income. Read on to find out some of the lesser-known types of income so you can make sure all of your bases are covered!
What Is Taxable Income?
In the eyes of the IRS, if you engage in an activity or enterprise that makes you money, that’s income. In addition to traditional wages, this applies to:
- Tips, bonuses, and commissions
- Severance pay
- Unemployment compensation
- Rental income
- Damages or money awarded by a court
- Prize money
Investment Income Is Taxable Income
Another biggie when it comes to taxable income is investment income. The IRS wants to know about this income stream and expects you to pay tax on it! Examples of investment income include:
- Gains from selling stocks or bonds
- Pension distributions
- IRA distributions
There are also some irregular cases that you may not even register as being income–but, to the IRS, they definitely are! These include:
- Vacation pay
- Bonuses given by banks for opening an account
- Cancellation of debt
- The value of barter income
This is not an exhaustive list and should not be used for tax preparation purposes. It is, though, a good place to start. In order to make sure your income reporting is full and accurate, contact the team at Pro Tax Resolution We’re your go-to resource for tax expertise in Virginia Beach and we’re here to help. Call us today and let us put our tax knowledge to work for you!