Tax time is just around the corner but taxes aren’t always the easiest things to get done, especially if you’ve started out on new endeavors this year. Here is a heads up for 5 terrible tax surprises that could catch you off guard.
Unemployment benefits are taxable. It seems a bit unusual that a program which is paid for by taxes can be taxed but it’s true. If you’re collecting unemployment consider having federal income taxes withheld. It’s similar to a regular payroll withholding so that you’ll be prepared when tax time comes around.
The divorce is over and now you’re moving on. Did you receive alimony in your settlement?? The IRS wants a chunk of it too. Though child support isn’t taxable, alimony is. However this is a happy ending to this story for the other side: if you’re the one paying the spousal support those payments are tax deductable.
Getting your credit card bill cut in half may have helped your personal financial situation, but it could be more lining in uncle Sam’s pocket. Any amount that you get creditors to write of, may count as income earned and is therefore taxable. For more details on this click here
You’re not the only one who’s lucky because they won money in a radio or other contest. This one of the many prize winnings that count as “other” income and isn’t just limited to cash prizes. Be careful when reporting the amount of a non-cash prize. In most cases companies that award these prizes will send you a 1099 form declaring the value of what you won. If your numbers don’t match up with theirs it could result in a long hard look from an IRS auditor.
Your social security income may be taxable, even if you’re retired. If you collect social security in addition to another income as much as 85% of your government checks could be taxable. To figure out how much your social security may coast you, you may have to do some calculating using the work sheet found in your tax form 104 or 1040a.
For calculators and articles that will help you avoid other tax surprises click here
Leave a Reply