MISCELLANEOUS INCOME

MISCELLANEOUS INCOME

Miscellaneous income includes various types of income that do not have specific lines of entry on Form 1040. Such income is generally reported on line 21, Form 1040, as "other income" Form 1040A or 1040EZ can not be used to report these types of income. Some common examples are gambling winnings, prizes, awards, jury duty fees, fees paid to election judges, and feespaid to nonprofessional executors of trusts and estates.

Some employers require their employees to surrender any jury duty pay they receive in exchange for their regular wages. Always ask a taxpayer imposes this requirement on its employees.

Employees in this situation must report their jury duty pay as income on line 21, Form 1040, in the usual manner. They may then back it out as a write-in adjustment to income on line 32, Form 1040.

Gambling Winnings

The gross amount of a taxpayer's gambling winning is taxable. Gambling losses may not be "netted out" of the gross winnings. Gambling losses may be deducted only as an itemized deduction on schedule A and only to the extent of winnings.

Withholding of income tax from certain gambling winnings is required. If a taxpayer had gambling winnings from which tax was withheld, he will have a Form W-2g which should be attached to, and filed with, Form 1040. Winnings are reported on line 21, Form 1040. The tax withheld is included with taxes withheld from Form W-2 on line 57, Form 1040. 

Hobby Income

Gross income from a hobby is taxable and is reported on line 21, Form 1040. Expenses to the extent of hobby income, are deductible as a miscellaneous itemized deduction on Schedule A.

Barter Income

Barter income (the value of property or services a taxpayer receives in exchange for property or services rendered) and kickbacks (amounts received for referrals) are taxable miscellaneous income or may be self-emplyment income.

NONTAXABLE INCOME

Only income that is specifically exempt from tax is nontaxable. Income that is specifically exempt includes welfare benefits, gifts, most bequests and inheritances, workers compensation, and most veterans' benefits.

Scholarship and Fellowships

Some scholarships are nontaxable. But first, we'll those scholarships that are taxable.

A degree candidate will follow this same procedure of reporting any scholarship income spent for, or designated for, room and board. However, he does not need to report scholarship money spent for tuition, fees, and course-required books, supplies, and equipment. These amounts are excludable from gross income. The recipient is responsible for determining whether the grant from gross income. The recipient is responsible for determining whether the grant was used for qualified tuition and related expenses.