 Income tax 2021-2022, other income part two. Get ready to get refunds to the max, diving into income tax 2021-2022. Tax formula, line one income. This is the first page of the form 1040, focused on line number eight. Other income from schedule one. Here is schedule one focused on line number eight. And we're going through some of the items that are included in the subcategories for line number eight. The total for schedule one, part one, then flowing back up to the form 1040 page one, line number eight. Scrolling back down, we're now going to the jury duty pay. So if you served jury duty, you may have received pay from the court for your time. So obviously oftentimes this isn't a very large or significant amount, but we wanna make sure that we're reporting the jury duty and part of the reporting process is to make sure that we're reporting everything we need to so that our documentation lines up with the documentation that's in the IRS system, because anything that we don't report that doesn't line up with what it should in accordance with the documentation on the IRS's side could kind of delay the processing of the return as it needs to like an actual person to kind of figure out what the differences and discrepancies may be. So you may also have incurred expenses to perform your civic duty, which the court may have reimbursed you for. This also counts as income. How you handle jury duty pay and expenses can depend on your employment and the expenses you incurred to attend jury duty. Prizes and awards. So this is another one that doesn't come up all the time, but you might have prizes and awards that you would have to deal with, enterprises and awards, but see the instructions for line eight I. So you can go into more detail with regards to prizes and how exactly you would need to report them in specialized type of cases where you might have those kind of things. Olympic and Paralympic medals and USOC prize money. You could take a look at those specialized categories to find more detail on them. You can go to the IRS website and look for the 1040 instructions. Activity to engage in for profit income. In other words, you might get some income and you might get documentation for some income. For example, a 1099 of some kind for something that would look kind of like a business maybe, but it's not actually a business for you. You're doing it basically for fun as in essence a hobby that is generating some income but you're doing it principally not for income generation, but as a hobby. If that's the case then instead of reporting something on the schedule C and having to deal with possibly social security and Medicare and also having to deal with possibly having a loss which could be beneficial for taxes but something the IRS is going to be skeptical of. You record it as a hobby in which case you might have to report the income in the other line item. The benefit of that is that if it's not an actual business engaged for profit and you're gonna have income related to it then you would like to say I'm not gonna be paying self-employment tax, social security and Medicare which you would if you recorded it on the schedule C so you would actually benefit from recording it basically as hobby income and just paying the federal income taxes on it. However if it was a business then you probably have business expenses as well and if you have expenses those could be deductible reducing the amount of income that you would be paying possibly even having a loss. So a lot of times people are gonna have a question as to whether something is a hobby or not classic examples or something like horse racing for example is always a classic example that there's court cases on and things like that because oftentimes it's an expensive hobby where you could have winnings related to it but you also could have substantial losses and if you get into this in more detail in terms of what you have to prove in order for something to be a business versus a hobby in other words if you're in a business that's running substantial losses year over year then the IRS is gonna start to take the position possibly after three years of substantial losses or more that you really are dealing with something that's a hobby and the emphasis on being able to prove that it's a business becomes more reliant on you as opposed to the other way around the IRS having to prove that what you're doing is a hobby. So if you're doing something that's running losses in other words you're gonna have to be more careful that the IRS is gonna basically classify it as a hobby as opposed to a business because you might be getting tax benefits from taking losses on what you're claiming as a business. If on the other hand you just got some random income and you have no expenses related to it you would rather record it as a hobby income as opposed to business income because if it was business income and you didn't have a loss but you just recorded the income you could be subject to self-employment tax social security and Medicare as opposed to if you report it as a hobby. So generally the IRS classifies your business as a hobby it won't allow you to deduct any expenses or take any loss for it on your tax return. If you have a hobby loss expense that you could otherwise claim as a personal expense such as the home mortgage deduction you can claim those expenses in full. So obviously if it was something that you could say was a business related item and you had part of your home for example as part of the business related item but it's not really a business it's a hobby then you could still deduct the home interest for example on the schedule A in that case. For tax years prior to 2018 and the reason we're talking about 2018 here is because there were substantial changes made after that point in time. So prior to 2018 other expenses such as advertising wages insurance premiums depreciation or amortization may also be usable as an miscellaneous itemized deduction subject to 2% of your adjusted gross income. However, you must have earned more total income in your hobby than the amount of all these deductions. In other words you can't really have a loss that would be subject here. And this was kind of a confusing component as well because if it was a hobby then you got to report the hobby income and then you would only get the itemized deductions possibly if you were itemizing and then they would be on the schedule A and then they would have been under this 2% of adjusted gross income. So they had this kind of percent requirement that was in place and you couldn't have more of the deductions than the income. So it was a bit of a confusing situation. So anyways, including your personal deductions. So in that scenario it's likely the IRS would categorize your hobby as a business anyway. So beginning in 2018 miscellaneous itemized deductions are no longer deductible and therefore no hobby expense is able to reduce hobby income. So in other words, you might have people kind of thinking about the old rule they're saying, well, this is a hobby. I should have itemized deductions. I should have these miscellaneous deductions here but they took that away in 2018. So you don't have that at this point in time. So if it is classified as a hobby, then you're not gonna be able to take any deductions for it like in the similar fashion as you did in the past. So stock options, enter online 8J any income from the exercise of stocks options not otherwise reported on form 1040 or 1040 SR line one. So stock options are kind of a form of compensation. Oftentimes they might be included in the documentation. Say it was stock option, that would be included in line one if it was something through like your work or something like that. If not, then this would be the default where you'd have to report it otherwise more of an unusual kind of line item oftentimes. Income from the rental or personal property if you engage in the rental for profit but we're not in the business of renting such property. So if you have more detail on that one you can also see the instructions for line 24B. You can take a look at that on the instructions for the form 1040. So notice in rental property if you're talking about rental property in general then you might have the schedule E instructions and we'll talk more about a schedule E in future presentations possibly as well. Olympic and Paralympic medals and USOC prize money the value of Olympic and Paralympic medals and the amount of the United States Olympic Committee the USOC prize money you receive on account of your participation in the Olympic or Paralympic games may be non-taxable. So not income in other words a non-taxable amount. These amounts should be reported to you in box three of form 1099 miscellaneous to see if these amounts are non-taxable first figure your adjusted gross income including the amount for your medals and prize money if your adjusted gross income is not more than 1,500,000 if married filing separately these amounts are non-taxable and you should include the amount on box three of form 1099 miscellaneous online eight I then subtract it by including it online 24C. So that's more of an unusual kind of situation but if you have that come up then hopefully again the software will probably be guiding you and helping you out in that instance as well. So other income use line eight Z to report any taxable income not reported elsewhere on your return or other schedules. So all these other items if you see you still see something that you say is income and remember the IRS sees everything as income unless they state otherwise. So if you're saying hey I've found $100 on the ground I don't see anything saying that shouldn't report that. The IRS doesn't know about it so but you know because there's no 1099 that they got or anything like that but maybe I'd need to report it as income. So you might put that as other income down here. You don't want to put it as a schedule C income or anything like that because then you might be subject to social security and Medicare on it. So you can list it here. List the type and amount of income if necessary include a statement showing the required information for more details see miscellaneous income in publication 525 reimbursements or other amounts received for items deducted in an earlier year such as medical expenses, real estate taxes, general sales tax or home mortgage interest see recoveries in publication 525 for details on how to figure the amount to report. You can find that on the IRS website that publication amounts deemed to be income from health savings account HSA because you didn't remain an eligible individual during the testing period. You can see form 8889 part three for that and Reemployment Trade Adjustment Assistance, RTAA payments. These payments should be shown in box five of form 1099G. So if you get a 1099G box five then that'll give you some indication in the documentation hopefully helping to guide you to the proper location. Other income loss on certain corrective distributions of excess deferrals see retirement plan contributions in publication 525 dividends on insurance policies if they exceed the total of all net premiums you paid for the contract recapture of a charitable contribution deduction related to the contribution of a fractional interest in tangible personal property. You can see fractional interest in tangible personal property in publication 526 interest in an additional 10% penalty applied to the amount of the recapture recapture of a charitable contribution deduction if the charitable organization disposes of the donated property within three years of the contributions see recapture if no exception use in publication 526. Taxable part of disaster relief payments see publication 525 to figure the taxable part if any of your disaster relief payment is taxable attach a statement showing the total payment received and how to figure the taxable part that could be applicable depending on the area that you're doing taxes in. So if you're in an area that was affected by a disaster that you might want to research that a bit more otherwise it's probably more of an unusual thing to be picking up. Taxable distributions from a Covertel education savings account the ESA or a qualified tuition program the QTP distributions from these accounts may be taxable if A in the case of distributions from a QTP they are more than the qualified higher education expenses of the designated beneficiary in 2021 or in the case of distributions from an ESA they are more than the qualified education expenses of the designated beneficiary in 2021. So in other words you got that you got the money you're supposed to spend it in a certain way and if you didn't then it might be then taxable at that point in time because you got a tax benefit from the growth of the money and those are kind of specialized tax tools in and of themselves. So you know we could spend a whole you could research them in and of themselves and B they were not included in the qualified rollover non-taxable distributions from these accounts don't have to be reported on form 1040 or 1040 SR this includes rollovers and qualified higher education expenses refunded to the student from a QTP that were re-contributed to a QTP with the same designated beneficiary generally within 60 days after the date of refund you could see publication 970 for more information there which you can find on the IRS website irs.gov irs.gov