When the new year starts, that usually means you are receiving documents to prepare your taxes. For some, they would rather sit through a boring staff meeting, go to the dentist or try to find a parking space at Walmart than actually sit down and do their taxes. While sites like Kiplinger are able to show overlooked tax breaks and deductions, not much time is explained on the odd things you may get taxed on that you had no clue. Make sure to properly report these things so you don’t get any surprise visits from the IRS after an audit.
- Is Social Security taxable?
Yes. This may not apply to you, but it could. You take one half of the Social Security money you earned in that year and add it to any other income (dividends, interest, wages, pensions, etc.). If this number is between $25,000 and $34,000 and you are filing as single, or if the number is between $32,000 and $44,000 for those filing jointly, then 50 percent of your Social Security is taxable. If you think that is bad, once you go above those limits then Social Security is taxed up to 85 percent.
- Is gambling or fantasy football winnings taxable?
Yes. While the local fantasy sports commissioner most likely won’t send you a 1099 form, any online league that pays out money will; since these are treated taxable income events. Along with fantasy sports winnings, general gambling winnings are also taxable. Venues have thresholds that tell them when to provide you a 1099 in the mail. You can deduct gambling losses up to the amount of your winnings, but we sure to have all of those losing betting slips. Be careful not to brag when you hit it big and don’t report earnings.
- Is gifting cash taxable?
A little trickier, but yes if it is above a certain limit. Don’t worry, your typical birthday or Christmas gifts won’t be, but once the total amount to a single person gets larger than gift, taxes may be owed. A single person can give up to $15,000 to another person with no tax penalty. If you are married, then each of you can give $15,000 for a total of $30,000. If the person you are giving money to is married, you can double that again for a total of $60,000. If this money is designed for a specific purpose such as medical bills, tuition, etc., then giving the money directly to the institution will not impact these numbers.
- I found a suitcase of money. Is that taxable?
Big yes. The dream is to find buried treasure somewhere, but no matter where you find an item or money it is taxable. The hidden ring in an antique you purchased, or the cash in the attic of an old home, the IRS considers all property that comes into your possession after being abandoned or lost as income. The tax is on the fair market value of that item, so keep dreaming of finding that treasure, but make sure to pay the taxes.
While none of the above information is tax advice and First National Bank and Trust Company is unable to provide such advice, we are able to help you through what your tax situation looks like for your future. If you need assistance in planning for future financial years, opening accounts that can lower your taxable income or investing that found treasure give us a call at 217-935-2148. We would love to assist through all of life’s great hurdles.
At First National Bank and Trust, we IGNITE PROSPERITY® by helping our clients do more with their money. Whether it’s saving a little extra cash each month or accomplishing a long-term strategy, our goal is to help you transform your financial life. Call and schedule an appointment today, one of our team members would love to help you do more with your money at FNBT. For more information visit firstnbtc.com or call 217-935-2148. #igniteprosperity