Updated: 3/30/2012 3:40 PM ET|
Bribes, thefts and other taxable gains
If you made money, the IRS wants some of it, and it doesn't matter if you made it honestly or by running drugs. Here are income-reporting rules you might not know.
Did you sell a few kilos of marijuana, take a bribe or steal a computer in 2011? Be sure to include that income on your tax return, unless you want to get in trouble with the Internal Revenue Service.
Virtually all Americans know they should report income such as wages, capital gains and tips -- even if those numbers sometimes don't make it onto their returns. But if you're an average taxpayer, you might not be familiar with some of the tax code's lesser-known income rules.
The basic rule is this: If it counts as income, it's taxable.
It doesn't matter where that income comes from. Prohibition-era gangster Al Capone contended, "The government can't collect legal taxes from illegal money," but he was wrong and wound up imprisoned for eight years for tax evasion. The tax laws are regularly used to nab other crooks the same way.
Maybe your year was better than a convicted drug dealer's. Did you win a Nobel Prize or a beauty contest? You might have additional income to report.
Don't believe us? We've gone straight to the source -- the IRS website -- and pulled language from the agency's rules on income. The examples below are all in the IRS' own words:
Bribes. If you receive a bribe, include it in your income. (Yes, the IRS actually says this.)
Emotional distress. Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Do not include them in your income.
If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia and stomach disorders.
Employment agency fees. If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. However, if you pay it and your employer reimburses you for it, it is includible in your income.
Found property. If you find and keep property that does not belong to you that has been lost or abandoned, it is taxable to you at its fair market value in the first year it is your undisputed possession.
Free tours. If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income.
Gambling winnings. You must include your gambling winnings in income on Form Form 1040, line 21. If you itemize your deductions on Schedule A (.pdf file), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.
VIDEO ON MSN MONEY
I will tell you about the tax that REALLY bothers me.! I worked for over 40 years, paid my taxes with out fail.
I was so upset to find that I had to PAY tax on my Social Security benefits, haven't I already paid tax on that money I earned over the past 40 years? This is double dipping, our tax system really needs an overhaul.
Ohh Yeah, If I win at the Casino or find a envelope full of cash I'm really going to report that income to IRS.
Who needs legalized prostitution----------------------------------------------------------------------
both the federal and the state governments SCREW me every day!!!!!!
MSN Staff is obviously smoking Crack or promoting the IRS / Dept. of Treasury / US Governments' interest SHAMELESSLY.
Garage sale items are not taxable as income. You purchased the Item Retail, not wholesale with a business license or tax ID. You sold it at a depreciated loss. No gain. No tax. Even if you managed to sell it for more than you paid for it, your a fool to claim it, and dreaming if you think they'll ever find out.
Coins. Gold and Silver eagles and St. Gaudens have numerical value on them placed by congress through the US Treasury. If you sell them for federal reserve notes, it is IRRELEVANT under THE LAW what the fair market value is, the coin and paper have place on them numerical value from the sovereign and cannot be discriminated against. The 1oz. Gold Coin = $50 Dollars of lawful monies, the 1 oz. Silver Coin = $1 Dollar of lawfull monies. The Supreme Court ruled on this several times. No income, no taxes owed. Buy your Gold and SIlver COINS, keep and sell them as you wish.
You are NOT required to report ANY Income from illicit gains from criminal activity, that is a VIOLATION of your 5TH AMENDMENT RIGHT against self incrimination.
Hobby. This is just stupid. A hobby by DEFINITION is not a business and shows no intent to make a profit, even if it does, it is not income and cannot be taxed. For instance, set up a table at a gun show and sell your personally owned stuff-ammo, magazines, gear. you made money? Good, but it's not income-No tax. The ATF WILL NOT LET YOU HAVE A FEDERAL FIREARMS LICENSE if it JUST A HOBBY! You are NOT a BUSINESS with the intent to make profits. And how do they track cash from hobbies? They don't. They bully and use fear tactics to get you to had over money you do not owe.
You are a fool to fall for this infantile tactic if you do and deserve to lose your $$$.
The great thing about paying in tax dollars--------------------------------------
is watching the liars, whores, and thieves in DC piss it off like there is no end to it !!!!
Another joke is any lottery winnings.
1) I work hard and pay my taxes.
2) With what I have leftover I buy a lottery ticket.
3) I win the lottery ( A pool of money that has already been taxed)
4) I pay taxes on the winnings, therefore paying twice.. literally...
We are still in deficit... amazing...
What a joke, do these laws pertain to our so called Elected officials? Do they really claim their fair share? All monies earned, legal or Illegal should be claimed, (gifts, Illegal actives, kickbacks, sale of personal items, stolen property).
Are they claiming their Retirement and Medical benifits paid for by the taxpayer.
Are they claiming for their vehicle parking, paid for by the taxpayer..
Are they claiming for their exercise facilities', pool and indoor recreational facilities
Are they claiming a fair value for any meals received at a reduced cost or free.
Once elected to screw their constituants, Their jobs are in Wash DC, do they claim the expense of returning to their district paid for by taxpayer.
At the end of the year are they issueing a W-2 to thier misteses for services rendered
This is exactly why cash should never become extinct. The greedy government cannot track cash that you receive from cash transactions…unless you do something stupid like deposit it into a bank account. Basically, don’t be a moron with the cash you receive and the IRS will never know that it exists. Taxes are so much higher that we all need to start finding “under the table” ways to make cash just to keep our heads above water. The government is going to force us all into feeling like illegal immigrants who have to stay off the radar just to survive. Sad regression if you ask me!
Early on, taxes were voluntary!!!
The IRS, SSA, and the federal government are the biggest Ponzi schemes the world has witnessed!
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