It’s that time of year again. That’s right: tax season. It seems like we’re always aware of the tax deductions we’re eligible for, but sometimes we don’t know exactly what taxes we should be paying. When it comes to filing your taxes, you’re better off safe than sorry. Make sure you’re not caught off guard by owing taxes.
Filing your taxes may not be the most exciting thing you do this month, but you’ll feel better if you go ahead and get it done. As you prepare to file, make your life easier by gathering all the documents you need.
You’ll want to make sure you have access to:
- Your W-2s
- Unemployment Documents (if necessary)
- Self-Employment or Independent Contract Documents
- Alimony Documents
- Pension Information
- Rental Property Income
- Income from Property You’ve Sold
- Other Miscellaneous Income Documents
If you haven’t considered that last bullet point, we’re here to help. We even found some deductions you might be able to use. As you sit down to do your taxes, you’ll want to account for the following:
- Any Belongings You Sell or Resell
Some of us have hobbies that pay. I enjoy selling sports memorabilia on Esty and eBay. Whether you sell your handmade guitars on Etsy or your homegrown squash at the farmers’ market, you’re responsible for reporting that income and paying taxes on it. The same is true of any items you resell on eBay or Letgo. Make sure you keep track of all the items that sell through receipts in order to properly account for them when you file.
Form Needed: 1040 or a 1099-K if you made over $20K.
- Casino and Gambling Winnings
Do you like the slot machines or are you more of a blackjack kind of guy? Either way, if you win a small amount or substantial sum, the IRS wants to know about it on a W-2G form. You have to report any money you earn from the lottery, horse or dog races, casinos, even the church raffle. You even have to claim that one time you went with your great aunt and won Bingo.
Deductions: You can deduct your gambling losses with a 1040-A if you have a record of your losses.
- Anything You Barter or Trade
Okay, this one is a little odd, but you have to claim the value of anything you trade. This includes your buddy’s mechanic services in exchange for you fixing his kitchen sink on a Tuesday evening if you are both professionals. Bartering income doesn’t have to include any cash exchange, just an agreement to trade goods and services that have a monetary value.
Form Needed: In order to report your bartering income, you’ll need to fill out a 1099-B.
- That VRBO or Airbnb Rental Income
This year you finally put that mother-in-law suite to use and rented it out on Airbnb. Even if you did it once and had a guest stay for 15 days just to realize that housing strangers isn’t your thing, you still have to report that money that you made. As a vacation rental host, you have to let Uncle Sam know how much money you made from your rental in the past year.
Exception: If you don’t rent the property out for more than 14 days and you stayed there for at least 10% of the total days you rented it out, you may not have to pay.
Form Needed: 1040
- Payroll Taxes for Household Help
Whether you use a babysitter for date night, a nanny during the week, or a housekeeper from time to time, you have to make sure your household help taxes are in order. You’re technically considered an employer if you use a nanny and will need to pay Medicare taxes (or FICA) taxes. This is about 7.6% of your household helps wages. This one can get a little complicated, so you’ll want to see a nanny tax payroll service to make sure everything is in order.
- Fantasy Sports Winnings
If you won your Fantasy Football league: congrats! But don’t forget to report that to the IRS this year. This may sound like a meager amount, but the Fantasy Football indutry is over a $70 billion industry! So, make sure the IRS is aware that you pick the best players consistently week after week with a 1099-MISC form that lists your winnings.
Deduction: You can subtract the league sign-up fee from your winnings
- Scholarships
If you received a scholarship, you may need to report some or all of it as income. Your scholarship is considered taxable income if it’s not used directly for tuition, books, supplies, fees while you’re enrolled full-time or part-time in an accredited college or university. This means that if you win a scholarship for an awesome essay on how to reduce tractor emissions, but you’ve already covered your school expenses, you may need to report the income.
Form Needed: 1040, 1040EZ or 1040NR-EZ
It’s great to earn a little extra money by selling what you make or grow. And that Airbnb may just get off the ground sometime this spring, so make sure you keep accurate records of all your income and expenses. And if you made it your mission to start investing this year, make sure you stay on track to earn some extra cash to report on next year’s taxes.
As April 15th approaches, make sure you’re prepared with all the documents and forms you need to claim these sources of income that tend to slip our minds. Remember to take advantage of any deductions that are available to you, and don’t get overwhelmed or forget to file on-time. Happy tax season and have fun filing.