Finances & Taxes: Things Not To Do For Tax Year 2010

By Phillip Williams on April 13, 2010, 7:24 am Posted in Finance News

Benjamin Franklin once observed that the only things that are certain in life are death in taxes. When filing your taxes for last year or getting ready to file them for next year, there are some things a taxpayer should know. Federal regulations regarding offshore havens have changed, and a number of items may that many people may not consider taxable are considered income by the IRS.

Bartering And Other Sources Of Income

If a person decides that bartering his services for other goods or services may get him out of paying taxes, he will be disappointed. If the goods or services bartered have an actual cash value, it is considered income by the IRS. Few people keep track of these items, however. More interesting is that a person must pay taxes even on income earned by illegal methods. You even have to include income you earned from embezzling or kickbacks. The historian may remember that the federal government never managed to try Al Capone for murder or other crimes. He spent time in prison for tax evasion.

As odd as it may seem, a taxpayer does sometimes have to declare debt reduction as taxable income. If a taxpayer benefited from a reduction in debt, the IRS considers it income that an individual may have to pay taxes on. Be sure to declare all these things on your taxes, although a person who gains money from embezzlement may not wish to state that as his source.

 

Things You Do Not Have To Declare

Social security benefits are tax-free, as are black lung disease benefits. A public safety officer enrolled in some retirement plans may or may not have to pay taxes depending on the nature of his retirement benefits. The IRS does not consider child support payments as income either. The IRS.gov website or a tax professional can tell you what you need to pay taxes on and which items are exempt.

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