Posted by bobnone | Posted in Credit Card | Posted on 30-05-2009
Credit Card Rewards Taxable Income ~~Financial Matters of Life ~~
Honest or dishonest money-IRS wants a part of it
Have you sold a few kilos of drugs? Stole the computer and sold it? He took a bribe? Report to IRS to include in your tax return, otherwise you may have trouble with the IRS.
Here is an explanation of income and its position as attorney for the IRS rules:
Bribes – If you have received a bribe during the year, rather than include it in your income. It is taxable.
Life Insurance Product – If you have received money in the death of an insured person is not taxable.
Cash discount – If you receive a cash refund from a manufacturer or distributor to purchase an item, you must reduce your basis by that amount. For example, if you buy a car $ 10,000 in cash and receive $ 500 rebate check from the dealer, the basis for your car is $ 9500 and this is the basis to be used to arrive at a figure of a gain or loss if you sell that car. And this is the basis for depreciation, as well.
Sale of personal items – If you happen to sell an article that was for personal use such as furniture, jewelry, and a refrigerator – then the gain of this transaction is subject to tax as capital gains. However, if you make a loss, you can not deduct as a loss, except where the item was purchased as an investment as gold or silver, where the loss is deductible.
Awards and Recognition – If you win a prize in a sweepstakes, contest, a beauty contest or other event, include in your income. If you refuse to accept the award, then it is not necessary to include. Awards received in the form of goods or services must be included as income to have its fair market value.
Winning lotteries – these are called gambling winnings. You must include these in their income. If you win a car or similar non-cash prize, must include the fair market value in income.
Hobby income – If you collect stamps or coins, the proceeds from the sale of these articles is your capital gain. However, if you sell your collection at a loss, the loss is not deductible.
Found Property – If you find a property that does not belong to you and keep it with you and then it is taxable fair market value.
Free Tour – If you get a free tour of a travel agency for organizing a group, this money is recorded their value to the IRS. Fair market value of the tour is reportable in 1040 line 21. But you can not deduct your expenses in serving as volunteer leader of a group.
The fees of an employment agency – If get a bid through an employment agency, and paid the agency fees, which are then reimbursed by your employer, the cost is your income.
Gifts and inheritances – The goods received by you as an inheritance gift is exempt from income. However, if you earn the income of the property, in the form of interest income and dividends or rent, then be treated as a liability and should be included in his statement.
Damages Received for emotional distress – If you receive compensation for mental suffering as a result of physical injury are not counted in your income. However, if you receive no money for emotional distress to bodily injury (can be from discrimination in employment), then that income is counted as your income after to deduct the cost of medical care due to emotional distress.
Cash received under a disability or unemployment insurance plan under the credit card – This money is treated as income and will have to report it on Form 1040, line 21
Support for initial payments – you buy a house if you receive help making a down payment on a corporation is a nonprofit organization, that aid is not counted as income. However, if the corporation is a mark as a tax exempt charitable association, then it is a gift and told in the "base" from home.
Fair market value of stolen goods – If you steal property, then its fair market value is counted as income unless the that his return to the owner in the same year.
Rewards – If you receive a reward for the provision of some data, then must include as income.
Organize a party for sales promotion – If a party intended to promote sales and a sale is made in that game, then any gift received by you for granting that part is counted as income.
Remember to get receipts from illegal activity not is making tax-free. If you have any doubt whatsoever, read the case of the famous gangster Al Capone was jailed for eight years for tax evasion.
About the Author
Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.
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