I’ve got a few tax things I need to take care of. So I decided to share some of my favorite parts of what’s taxable. These are from the IRS in the “Miscellaneous Income”:
-Really? You can just say that?
Foreign currency transactions. If you have a gain on a personal foreign currency transaction because of changes in exchange rates, you do not have to include that gain in your income unless it is more than $200. If the gain is more than $200, report it as a capital gain.
–Exchange rates can be some real bullshit.
Hobby losses. Losses from a hobby are not deductible from other income. A hobby is an activity from which you do not expect to make a profit. See Activity not for profit , earlier, under Other Income.
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.
-That little caution sign is disturbing.
-Wait a minute, if I make money, then I have to claim that. But if I lose money, oh well.
Holocaust victims restitution. Restitution payments you receive as a Holocaust victim (or the heir of a Holocaust victim) and interest earned on the payments are not taxable. Excludable interest is earned by escrow accounts or settlement funds established for holding funds prior to the settlement. You also do not include the restitution payments and interest the funds earned prior to disbursement in any computations in which you ordinarily would add excludable income to your adjusted gross income, such as the computation to determine the taxable part of social security benefits. If the payments are made in property, your basis in the property is its fair market value when you receive it.
Excludable restitution payments are payments or distributions made by any country or any other entity because of persecution of an individual on the basis of race, religion, physical or mental disability, or sexual orientation by Nazi Germany, any other Axis regime, or any other Nazi-controlled or Nazi-allied country, whether the payments are made under a law or as a result of a legal action. They include compensation or reparation for property losses resulting from Nazi persecution, including proceeds under insurance policies issued before and during World War II by European insurance companies.
-That makes sense.
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
-Wait what? You can just say that? The IRS is the agency that actually got Al Capone locked up.
Pulitzer, Nobel, and similar prizes. 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. However, you do not include this prize in your income if you meet all of the following requirements.
1. You were selected without any action on your part to enter the contest or proceeding.
2. You are not required to perform substantial future services as a condition for receiving the prize or award.
3. The prize or award is transferred by the payer directly to a governmental unit or tax-exempt charitable organization as designated by you. The following conditions apply to the transfer.
a. You cannot use the prize or award before it is transferred.
b. You should provide the designation before the prize or award is presented to prevent a disqualifying use. The designation should contain:
i. The purpose of the designation by making a reference to section 74(b)(3) of the Internal Revenue Code,
ii. A description of the prize or award,
iii. The name and address of the organization to receive the prize or award,
iv. Your name, address, and taxpayer identification number, and
v. Your signature and the date signed.
c. In the case of an unexpected presentation, you must return the prize or award before using it (or spending, depositing, investing it, etc., in the case of money) and then prepare the statement as described in (b).
d. After the transfer, you should receive from the payer a written response stating when and to whom the designated amounts were transferred.
-Wait, so you get to keep it, right? I mean…it is the Nobel or Pulitzer Prize. That’s such a specific one, right? I’d hate to have to think about the Taxman taking my Pulitzer money.
-Damn, Taxman don’t play!