Because U.S. taxes are due April 18 this year instead of April 15,* you have three more days to prepare. And Tony McEahern, head of wealth planning for The Private Bank in Wealth and Investment Management, says one good use of that time may be carefully reviewing your return to make sure you haven’t missed any taxable income.
“The answer to the question, ‘What is taxable income?’ is extremely misunderstood,” Tony says. “The answer is, ‘A lot more than you’d think!’ ”
Consider this short list, he advises — all considered taxable income by the Internal Revenue Service:
- Uncovered buried treasure.
- The Nobel Prize.
- Found money.
- Gambling winnings, including proceeds from fantasy sports.
- Olympic medals (gold, silver, or bronze).
Of course, the specific tax consequences to a particular taxpayer for items listed depends on your unique tax circumstances. And unfortunately, Tony adds, there’s no minimum to these items; the full value or amount is taxable.
He says most people believe that gambling winnings from a casino are only taxable if they receive a W-2G from the casino. Not so. To be clear, any amount you receive in winnings is taxable, even $1. For reporting purposes (an obligation on the casino), the casino must report amounts more than a certain limit. But these reporting requirements have nothing to do with the taxable income and amount you have to report and taxes you now have to pay.
And, as for buried treasure, Tony says he’ll never forget a real-life example from his days as a wealth planner. Wells Fargo had learned a client’s family had uncovered a Civil War-era chest with gold and silver coins on land they owned. Sold at a gold-price peak, the family netted more than $1.5 million.
“After a discussion, their accountant amended and filed the return and paid the tax,” he says. “They were glad we’d pointed that out, since they had never thought buried treasure was taxable.”
So take this year’s three extra days and consider what you earned in 2015. And go for the gold this summer, athletes, but remember: It may cost you.
*Tax Day is pushed back to April 18 because April 15 is a holiday in Washington, D.C. The city celebrates Emancipation Day April 16 in honor of the day President Lincoln signed into law a bill ending slavery there. April 16 falls on a Saturday, so Emancipation Day in 2016 is celebrated April 15.