With the onset of the coronavirus pandemic, crowdfunding websites such as Kickstarter and GoFundMe have become an increasingly popular way for small business owners to stay afloat. The upside is that it's often possible to raise the cash you need; the downside is that the IRS considers that money taxable income. Let's take a closer look at how crowdfunding works and how it could affect your tax situation.
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Social Security benefits include monthly retirement, survivor, and disability benefits; they do not include Supplemental Security Income (SSI) payments, which are not taxable.
If you've ever used--or provided services for-- Uber, Lyft, Airbnb, Etsy, Rover, or TaskRabbit then you're a member of the sharing economy and it could affect your taxes. The good news is that if you've only used these services (and not provided them), then there's no need to worry about the tax implications.
If you've invested in Bitcoin and decide to sell you need to consider the impact of virtual currency transactions on your taxes. Here's what you should know:
With the end of the year fast approaching, now is the time to take a closer look at tax planning strategies you can use to minimize your tax burden for 2019.
If you are living or working outside the United States, you generally must file and pay your tax in the same way as people living in the U.S. This includes people with dual citizenship.
As a small business owner, figuring out which form of business structure to use when you started was one of the most important decisions you had to make; however, it's always a good idea to periodically revisit that decision as your business grows. For example, as a sole proprietor, you must pay a self-employment tax rate of 15.3% in addition to your individual tax rate; however, if you were to revise your business structure to become a corporation and elect S-Corporation status you could take advantage of a lower tax rate.
All income is taxable unless the law specifically excludes it, but as you might have guessed, there's more to it than that. With that in mind, let's take a closer look at taxable vs. nontaxable income.
Generally, debt that is forgiven or canceled by a lender is considered taxable income by the IRS and must be included as income on your tax return. When that debt is forgiven, negotiated down (when you pay less than you owe), or canceled you will receive a Form 1099-C, Cancellation of Debt, from your financial institution or credit union. Form 1099-C shows the amount of canceled or forgiven debt that was reported to the IRS. Creditors who forgive $600 or more of debt are required to issue this form.