What Is Self-Employment Tax?
Self-employed individuals are subject to different challenges when it comes to taxes. Staying diligent and keeping accurate records can go a long way in easing the frustration.
Taxable Income Is More Than Just Your Wages
Do you know taxable income is much more than just your wages?
The first thing that comes to mind when talking about “taxable income” is usually wages, salaries, and commission. However, it actually encompasses much more - essentially anything unless specifically stated by law that it is not taxable. Fun, we know. Aside from your wages, the following are examples that fall under this category:
Salaries
Bonuses
Commissions
Tips
Alimony
Back pay
Security deposits
Self-employment income
Any compensation for personal services (helping someone move, etc)
Forgiven debts
Winnings from gambling
Contest winnings
Employee awards and cash prizes
Trust income
Estate income
Farm income Income from a hobby
Interest
Life insurance interest
IRA distributions
Fees from jury duty
Severance pay
Freelance income
Military pay and military pension
Punitive pay
Royalties
Unemployment benefits or unemployment compensation
Gross rent
Rewards Taxable grants or university scholarships
Lottery winnings
Any profit from a sale
Did we miss an example? Comment below and let us know some more!
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.
