5 Things You Owe Taxes On That You Don’t Know About

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If you’re one of the millions of Americans who haven’t filed your taxes yet, you should probably think about getting on it. To help out, we brought in retired IRS Revenue Officer Michael Raanan (who also happens to be a DSC member) to explain what falls under “taxable” income besides whatever you get in your paycheck. After all, just because it doesn’t show up on your W2, doesn’t mean Uncle Sam can’t take a big ol’ bite out of it.

Bartering: Goods and services exchanged between two parties must be reported to the IRS, not just when cash is exchanged. Which, as Raanan explains, means whether you’re trading eggs for milk, landscaping for dental work, DSC razors for Boogie’s styling products—you name the swap—the market value of the item gained must be reported as income to the IRS.

Tips: Unfortunately you can’t pocket 100 percent of the tips you made bussing tables during Sunday brunch without the IRS getting a piece, too. But it’s not just the waitservice industry, either; cab drivers, hairdressers, valets—basically anybody who accepts a gratuity—must report their tips as income.

Gambling: If you won big at the roulette table this year, get ready to share. “Even casual gamblers—or, gamblers who haven’t received tax documents from the casino—have to report all gambling winnings as income,” Raanan says. That includes cash and the fair market value of prizes like cars and vacations won from lotteries, raffles, horse races and casinos.

Damages from a lawsuit: On the off-chance that you were the big winner in a court of law this year, like a certain handlebar mustache wearing wrestler who was just granted $140 million, the IRS gets a taste. “There are exceptions,” say Raanan. Such as compensation received for physical injury or sickness—those winnings are 100-percent tax-free.

Any illegal activity you can think of: Your life of crime doesn’t exempt you from paying your fair share. Even illegal activities like “drug sales, prostitution and embezzlement are taxable,” explains Raanan. And while few criminals actually report their loot, it’s not a bad idea if they’ve been caught or expect to be caught during that tax year. In that case, filing may actually help them avoid being double-charged: once for the initial crime, and once again for evading taxes.

While reporting all these acquired assets may sound daunting, it’s ultimately the taxpayer’s responsibility to let the IRS know how much money, goods or services they’ve received during that year. Meaning, if you forget—wink—to report small sums of money, like that $300 you won in Vegas, the chances of receiving an audit are slim to none.*

*Our lawyer wants you to know that DSC is not offering tax advice, so don’t sue us if you get audited. Please.