Five Things You Actually Have to Pay Taxes On

1. Online Transactions

Do you need to pay taxes on online sales? That is a commonly asked question. Many people join the online space to make a buck, free from sales tax. The truth of the matter is that you do actually need to pay taxes on a hefty portion of your online sales. Online “garage sales” generally do not need to be reported. The general rule of thumb is that you will not need to pay taxes on something that you did not make a profit on. Antiques and other rare collectibles that have appreciated over time are the exception.

Income made from online sales can be labeled as a “hobby income” if there was no intention of making money. One test to determine whether this holds true is to assess whether the seller has made no profit from the hobby in two out of five consecutive years. However, if you are routinely making money on eBay or Craiglist, you are supposed to declare that income.

2. Bartering

Bartering is the exchange of goods or services that have equivalent value. Though it is a practice that has been around since the beginning of time, there are still many businesses that engage in trading goods for other goods or services in today’s economy.  According to Ormita Commerce Network, an estimated 70% of all Fortune 500 companies barter on a routine basis, adding up to billions in non-cash exchanges every year. Though this practice does not include the exchange of currency, the IRS requires businesses to report fair market value. If you choose to receive your salary through a fancy car, for example, you are required to pay taxes on the amount of the car. However, casual exchanges between non-commercial groups are typically not taxable.

3. Housekeepers and Babysitters

Hiring a housekeeper or a babysitter can certainly make your life easier, but not if you don’t follow the proper tax guidelines. The majority of people choose to pay individuals “under the table” for these types of services. In actuality, the IRS requires that you first verify whether your housekeeper or babysitter is legally able to work in the U.S. If she is your employee, then you will need to give her Form W-2 showing the amount you have provided for the previous year by January 31. When you file your own tax return, you will also include the Schedule H, Household Employment Taxes.

Alternatively, you are not required to pay taxes if the person you have hired is self-employed. This would be the case if the housekeeper or babysitter has more than one client, provides her own supplies, and sets her own schedule. If you have chosen to hire someone through an organized service, you would then pay the service and they would remit payment to their employees and withhold taxes.

4. Airbnb

With hotel rates skyrocketing, many travelers are looking for a less expensive alternative to their lodging. As a host, you are obligated to pay taxes on your income. The IRS treats Airbnb like any other independent contractor. Airbnb will send you a 1099k form at the end of every year detailing your business income through the site and you will be required to report all of your earnings. Taxes will always depend on your jurisdiction, but generally speaking, if you rent a room or residence out for more than 14 days in a year, you owe taxes.

5. Gambling

Any money earned from gambling may be subject to taxes, along with the fair market price of anything that you win. From lotteries, to gameshows, to racetracks, you can bet the IRS will make an appearance if you fail to pay taxes. Legally speaking, individuals are required to account for their winnings on their income tax returns. Depending on the amount won, you may need to complete a W-2G which reports the amount of your winnings in addition to the amount of taxes withheld. Gambling winnings are generally taxed at a flat rate of 25%. If taxes are automatically withheld from your earnings, you will receive a W2-G from the payer. You may deduct taxes from losses on your Schedule A. If you chose to itemize your deductions and you lost more than you won in a single year, you are not required to pay taxes.