Am I Required to Report All Income to the IRS?

how to report inheritance to irs

In general, if you have to ask whether you need to report certain income to the IRS. the most likely answer is, “Yes.” Here are some examples, courtesy of MSN Money .

Q. I hosted a party to sell products to my friends (and use my social circle for multilevel marketing from some corporation), and the company’s representatives brought me gifts. Do I have to report this?

A. Yes.

If you host a party at which sales are made, any gift you receive for giving the party is a payment for helping a direct seller make sales. You must report it as income at its fair market value.

Q. My sugar-daddy (er… loving husband) died and I had to pay to collect the reward (er… life insurance). Do I have to report this?

A. Yes.

Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract.

Q. This year, I’ve been taking bribes to keep the caviar smuggling ring off the FBI radar. Do I have to report this?

A. Yes.

If you receive a bribe, include it in your income.

Q. I ran for office this year and used campaign contributions to pay for my second cousin’s bodyguards and my daughter’s wardrobe. Do I have to report this?

A. Yes.

These contributions are not income to a candidate unless they are diverted to his or her personal use. To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns… Excess campaign funds transferred to an office account must be included in the officeholder’s income on Form 1040 in the year transferred.

Q. Instead of buying a Hummer for $70,000, I paid $80,000 for the vehicle and received a $10,000 rebate. Do I have to report this?

A. Yes, well, sort of. When you sell the car, figure your loss by using the sales price of $70,000, not $80,000.

A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate.

Q. I successfully sued a hip hop artist for sampling my music. Do I have to report this?

A. Yes. The article goes into detail to determine what kind of income is reportable.

To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces.

Q. I successfully sued my boss for emotional distress. Do I have to report this?

A. Yes.

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.

Q. I lost my job and my credit card’s insurance stepped in and made my payments for me. Do I have to report this?

A. Yes.

Generally, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability or unemployment. Report on Form 1040 the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year.

Q. I received assistance from a non-profit program to help pay for the down payment of my house. Do I have to report this?

A. Yes.

If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis.

Q. I got a job with the help of a headhunter who charged me for his services. Do I have to report this?

A. Yes.

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.

Q. I found an abandoned car and kept it while the person who lost the vehicle likely wept. Do I have to report this?

A. Yes.

If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession.

Q. My travel agency gave me a free tour of Paris. Do I have to report this?

A. Yes.

If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Report the fair market value of the tour on Form 1040 if you are not in the trade or business of organizing tours.

Q. I hit the jackpot in Atlantic City. No one was around to hear the bells, I didn’t attract any attention, and I am sure there were no cameras in the casino. Do I have to report this?

A. Yes.

You must include your gambling winnings on Form 1040. If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.

Q. I split $54,000,000 in lottery winnings with 12 of my coworkers. Do I have to report this?

A. Yes.

Winnings from lotteries and raffles are gambling winnings. In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses and other noncash prizes.

Q. I inherited a tenement and the tenants who I haven’t evicted are now paying rent to me. Do I have to report this?

A. Yes.

If property you receive this way later produces income such as interest, dividends or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited or distributed to you, that income is also taxable to you. If the gift, bequest or inheritance is the income from the property, that income is taxable to you.

Q. I sold my comic book collection. Do I have to report this?

A. Yes.

If you collect stamps, coins or other items as a hobby for recreation and pleasure, and you sell any of the items, your gain is taxable as a capital gain. However, if you sell items from your collection at a loss, you cannot deduct the loss.

Q. I am a street pharmacist and all my income is cash. Do I have to report this?

A. Yes.

Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040 or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Q. I’m a doctor, and pharmaceutical companies pay me incentives to push their drugs. Do I have to report this?

A. Yes.

You must include kickbacks, side commissions, push money or similar payments you receive in your income on Form 1040 or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity.

Q. I flashed my breasts at a wet t-shirt contest hosted by WTIT in a Miami Beach bar during spring break and won a prize. Do I have to report this?

A. Yes.

If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on Form 1040.

Q. I won the Nobel Peace Prize (in addition to being Time Magazine’s 2006 Person of the Year ). Do I have to report this?

A. Yes.

If you were awarded a prize in recognition of accomplishments in religious, charitable, scientific, artistic, educational, literary or civic fields, you generally must include the value of the prize in your income.

See Publication 525 for more information.

Q. I saw my girlfriend on America’s Most Wanted and ratted her out to the police. I collected a sizable reward for material information leading to an arrest. Do I have to report this?

A. Yes.

If you receive a reward for providing information, include it in your income.

Q. I bought art depicting dogs playing poker several years ago and sold the work this year to a rich idiot for a nice profit. Do I have to report this?

A. Yes.

If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry or silverware, your gain is taxable as a capital gain. Report it on Schedule D (Form 1040). You cannot deduct a loss… However, if you sold an item you held for investment, such as gold or silver bullion, coins or gems, any gain is taxable as a capital gain, and any loss is deductible as a capital loss.

Q. I found a bunch of LCD HDTVs which I can only assume had fallen off a truck. I sold a few out of the back of my own truck. Do I have to report this?

A. Yes.

If you steal property, you must report its fair market value in your income in the year you steal it unless, in the same year, you return it to its rightful owner.

Can you think of any other situations in which you may not be sure whether you’re required to report your income to the IRS?

Updated March 21, 2011 and originally published March 20, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Source: www.consumerismcommentary.com

Category: Bank

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