| A rose by any other name...What is considered | | | | Being lucky just isn't so lucky is it? The IRS gets a |
| "income" by the IRS? Is it just the money from your | | | | piece of your good luck, and if you don't share the |
| paycheck? Or is there more to it? The IRS defines | | | | wealth the IRS will find out and they will come after |
| income as any money that you receive in a given | | | | you. |
| year. So what does this include? | | | | Not only does the IRS tax your winnings, but since you |
| What can they take? In addition to the income from | | | | have to report them as income earned, your filing |
| your paycheck additional income that can be taxed: | | | | status may move up a bracket causing you to actually |
| interest on accounts, tips, and commissions. Other | | | | owe on your tax return. For example: let's say you |
| things that you may not have thought about include: | | | | won $100,000 in the lottery. After you have to pay |
| any side money you made in excess of $400.00. This | | | | taxes on the winnings, and then pay on your taxes |
| includes items sold as an e-bay auction or at the flea | | | | from your adjusted income return...your actual winnings |
| market. | | | | would only be about $50,000. |
| Keep track of paperwork...With e-bay auctions you | | | | Nothing is free...One of the pitfalls of won money is |
| have receipts of all your transactions. Now selling at a | | | | that people think of it as free money and burn through |
| flea market or garage sale is a bit trickier. Mainly since | | | | it...fast. Then when the tax bill comes in they have no |
| receipts aren't very common. Again you only have to | | | | way to pay it. But because you have to report your |
| report earnings that are over $400.00, so on the | | | | windfall and that's the income the IRS sees they're not |
| average you won't have to include these as income. | | | | going to cut you any slack. |
| You didn't win it all...In addition you have to report | | | | It's a number's game...Reporting your income is just like |
| gambling winnings which include the traditional casino | | | | claiming your deductions and tax credits. Keep your |
| winnings, as well as lottery winnings. You also have to | | | | receipts. That's right you have to report the good and |
| include any prize winnings such as those from | | | | the bad...or else an IRS-Hitman might just show up at |
| contests or game shows that are valued at over | | | | your door. |
| $500.00. | | | | Now you have the smoking gun...Use it! |