Hi. I’m Patrick, and I work for the IRS.
You probably know you must include things like wages, tips and interest on your tax return.
But did you know you may have to report other types of Miscellaneous Income as well?
This may include bartered exchanges for goods or services, awards, prizes or contest winnings and gambling proceeds.
When it comes to bartering, the Fair Market Value of goods or services exchanged is taxable and must be reported by both parties on their tax returns.
Suppose you got your car repaired by a mechanic who values the job at $1,000. You are a house painter. So, in return, you paint his house, a service you value at $1,000. You must report $1,000 of Miscellaneous Income on your tax return, and he, too, must report $1,000 of income on his.
Another reminder, gambling income includes winnings from lotteries, raffles, horse races, poker tournaments and casinos.
And it must be reported on your tax return regardless of amount.
One more thing, the cash value of awards and prizes is usually taxable.
To find out more, check out IRS Publication 525, Taxable and Nontaxable Income.
You can find it at our website at www.IRS.gov