Taxes are a part of life, but most people only think about their paycheck or maybe a side hustle when tax season rolls around. The truth is, the IRS taxes a lot more than just your regular income. Some things you might never expect to be taxable can actually land you with a bill if you’re not careful. Knowing what counts as taxable income can help you avoid surprises and plan better for the year ahead. If you want to keep more of your money and avoid trouble with the IRS, it’s important to know what’s on the list. Here are six things you might not realize are taxable, and what you can do about them.
1. Gambling Winnings
The IRS wants a piece if you win money at a casino, buy a lucky scratch-off, or even hit it big at bingo night. Gambling winnings are taxable income, no matter how small the amount. This includes cash, prizes, and even the value of non-cash items like cars or trips. You’re supposed to report all your winnings, even if you don’t get a tax form from the casino or lottery. If you win $1,200 or more on a slot machine or bingo, the casino will usually give you a Form W-2G, but smaller amounts are still your responsibility. You can deduct gambling losses, but only up to the amount of your winnings, and only if you itemize deductions. Keep good records of both your wins and losses to make tax time easier.
2. Unemployment Benefits
Losing a job is tough, and unemployment benefits can help you get by. But many people don’t realize that these benefits are taxable. If you received unemployment payments, you need to report them as income on your tax return. You can choose to have taxes withheld from your payments, but if you don’t, you might owe money when you file. This catches a lot of people off guard, especially if they’re already struggling financially. If you’re getting unemployment, consider setting aside a portion for taxes or asking for withholding to avoid a surprise bill in April.
3. Prizes and Awards
Winning a contest or getting an award feels great, but it can also mean a tax bill. The IRS taxes the fair market value of prizes and awards, whether it’s cash, a new car, or a vacation. Even if you win a raffle at work or a gift basket at a charity event, you’re supposed to report it. The organization giving the prize may send you a Form 1099-MISC if the value is $600 or more, but you’re responsible for reporting all prizes, no matter the amount. If you win something big, set aside money for taxes right away. This way, you won’t be caught off guard when it’s time to file.
4. Bartering Income
Trading goods or services with someone else might seem like a simple swap, but the IRS sees it differently. If you barter—say, you fix someone’s car in exchange for landscaping services—you both have to report the fair market value of what you received as income. This rule applies to both individuals and businesses. Even if no cash changes hands, the value of the goods or services is taxable. If you use a bartering exchange or website, you’ll likely get a Form 1099-B showing the value of your trades. Keep track of your bartering activities and be ready to report them at tax time.
5. Forgiven Debt
If a lender forgives or cancels your debt, the IRS may treat the amount as taxable income. This can happen with credit cards, mortgages, or other loans. For example, if you settle a $10,000 credit card debt for $4,000, the $6,000 that was forgiven is usually taxable. The lender will send you a Form 1099-C, and you’ll need to report the forgiven amount on your tax return. There are some exceptions, like certain student loan forgiveness programs or debts discharged in bankruptcy, but most canceled debts count as income. If you’re negotiating debt forgiveness, ask about the tax impact before you agree.
6. Cryptocurrency Transactions
Buying and selling cryptocurrency is more common than ever, but many people don’t realize these transactions are taxable. You may have a taxable gain or loss if you sell, trade, or use cryptocurrency to buy something. Even swapping one type of crypto for another counts as a taxable event. The IRS treats cryptocurrency as property, so you need to keep records of your transactions, including dates, amounts, and values. If you make a profit, you’ll owe taxes on the gain. If you lose money, you may be able to deduct the loss. Make sure you understand the rules before you start trading crypto.
Staying Ahead of Tax Surprises
Taxes can be confusing, but knowing what’s taxable helps you avoid problems and plan better. Many people get caught off guard by things like gambling winnings, unemployment benefits, or forgiven debt. The key is to keep good records and ask questions if you’re not sure. If you receive something valuable, whether it’s cash, a prize, or even a forgiven loan, check if it’s taxable. Talk to a tax professional or check the IRS website for guidance when in doubt. Staying informed can save you money and stress when tax season comes around.
Have you ever been surprised by something you had to pay taxes on? Share your story or tips in the comments below.
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