Things that you may not realize are taxable. Everyone knows that wages are taxed by the federal government, but Uncle Sam has a far reaching definition of “taxable income”. It covers numerous types of earnings that many people don’t realize are subject to federal income taxes. What follows are several examples of taxable income that may come as a surprise. Social Social Security. Generally, people pay federal income taxes on their benefits if they have other substantial income–such as wages, interest or dividends. If your Social Security benefits are your sole source of retirement income, or you have little income in addition to your benefits, your benefits likely would not be subject to federal income taxes.
As of January, the average monthly benefit for retired workers was about $1,464–for a total of $17,568 per year. That’s well below the taxable threshold for individual tax return filers–whose benefits are taxable only if what the Social Security Administration calls their “combined income” is between $25,000 and $34,000.
The Alaska Permanent Fund. Things that you may not realize are taxable. Anchorage, Alaska was named one of the best places to retire event with its cold temperature, being in Alaska means receiving a check every year from the Alaska Permanent Fund, which pays out an average of $1,600 per person per year.
Bribes are taxable income. The IRS expects people to report income from bribes on their tax returns. Publication 17 states clearly that bribes are taxable income. Illegal activities are taxable as well. The IRS expects criminals to report all income derived from illegal activity, otherwise they could get nailed for tax evasion, just like Al Capone. It might sound odd for a criminal to do this, but that’s what the Internal Revenue Code states.
Alimony is taxable income also. For divorce and separation agreements executed before 2019, alimony is generally deductible by the payer, and the recipient generally must report it as income.