In the race to meet tax deadlines, Americas are forgetting to include all sources of taxable income on their tax returns. Personal finance resource www.GoBankingRates.com investigates the five most common mistakes Americans make when reporting their total income to the IRS.
While neglecting to include all income sources on a tax return may seem insignificant to some taxpayers, doing so can easily result in trouble with the Internal Revenue Service (IRS). Go Banking Rates identifies the top 5 taxable income streams that Americans neglect to report.
Certain gifts that reach a valuation limit must be added to tax documents. Unreported monetary gifts risk an Accuracy-Related Penalty, according to the IRS, which is equal to a fine of 20% of the underpayment due.
“Gifts that you give to someone else may be taxable,” notes Clay Wyatt, lead reporter for the investigation. “The good news is that you can give up to $13,000 worth of gifts per person, so for instance, you can buy each of your four grandchildren a $13,000 car without giving a ‘gift’ to Uncle Sam.”
In addition to gifts of over $13,000 in value that need to be reported in tax returns, GoBankingRates also explains four other income sources that many filers don’t realize need to be reported.
