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There are an enormous number of side gigs that could help you earn a little extra cash each month. Whether you want to drive for Uber, deliver groceries, try your hand at freelance graphic design, or even officiate weddings, there have never been more opportunities to work for yourself.
Come tax season, however, this can get confusing. You might find yourself wondering what income is actually taxable. This is especially true this year, since you may have received child tax credit payments or other forms of COVID relief that may impact your return.
As it turns out, the IRS has pretty much thought of everything. There are a lot of particular rules about what the IRS considers a taxable income source and what it doesn’t — but, in general, most sources are subject to taxation.
“Unfortunately, the IRS views almost all money received by taxpayers as taxable income,” said Aaron Lesher, a CPA with Hurdlr. “The IRS even lists income from criminal activity as technically taxable, although if you’re making a living from criminal activity, you’re probably not too worried about that.”
We chatted with tax experts to tackle this complex question and ease some of the confusion. We then compiled this list of obvious and not-so-obvious taxable income sources you should know about.
For a full reference of what the IRS considers taxable versus nontaxable income, take a peek at its handy 39-page guide explaining all of the applicable tax rules for preparing your 2021 return.
What Does the IRS Actually Consider Taxable Income?
Here are the things you must report to the IRS as taxable income this spring.
1. Your Salary
This one is the type of income most people are familiar with. If you get a steady paycheck from an employer, you need to report this income to the IRS. Your salary also includes bonuses and commissions.
2. Tips
Waitresses, waiters, bartenders, and other folks who work for tips must report them as income to the IRS. This includes cash…
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