What do you have to pay tax on?

Question

My mom says that your supposed to pay taxes on any money you recieve no matter where it comes from even the Dollar or Two that I win on Scratch off tickets from the lottery. Is this true?

Answer 1

Basically True.

In Canada the test of whether money is taxable is based on if you EARN it. Therefore, lottery winnings are tax free here. So are things like inheritances, court judgements (other than employment related), and things like that.

In the USA, I believe inheritances are now tax free, but lotteries winnings are certainly taxable, so are big casino wins and such.

Essentially, there is no such thing as tax free money :) You know what they end up getting mofia bosses and drug lords for?
Not killing people or selling thousands of tons of coke, but for not paying taxes on the money they make ;0)


I thnk several other answerers hit the nail more on the head. The idea is whether or not you DECLARE the income. One suggested that if it is less than $120 you dont need to Declare it. Declaring income doesn't mean you necessarily
PAY tax. In Canada, every person can make up to about
$9000 per year without having to actually PAY any tax, beacause of a BASIC exemption. In the USA I believe they have the same type of exemptions..That is each person can Declare a certain amount of money before they have to pay tax.

So go to your Mom and ask, Hey Mom, Since I don't work, If I declared all of my scratch and win tickets, I wouldn't actually PAY any taxes right, wouldn't my personal exemptions cover me?

You just need to figure out what your personal exemptions are.
I'm not sure what they are in the USA.

Still, your mom is teaching you a valuable point!!

Answer 2

Every dollar that you receive that is not specifically exempt from Federal income tax is subject to income tax. There are limits that the total income must reach before you must file because amounts below that would be eliminated by deductions and exemptions. On the other hand if you are making above the filing limits and receive $1 more you must report that on your tax return. Under reporting is the most common thing that brings attention from the IRS.

Answer 3

You are right my dear, MOST do pay taxes. And since that is one of their main arguments and you prove them wong they have to find some other way to be anti-illegal. So what do they do? They make up stuff about illegals. Anything that they say I take with a grain of salt. Don't listen to JConly...... I never do. He always wants someone to provide facts. But then he hardly gives proof of the things he claim.And when he does they are so made up.

Answer 4

Technically....she is correct.

If you buy a scratch off for $1 and win $5, you should but $4 down on line 21 as gambling winnings.

Answer 5

Well a limit is set...tickets winning certain amounts are not taxed at the time winnings are paid.
In theory you are supposed to report all earnings over a certain limit.

Good luck,
D
www.stockmysite.com

Answer 6

Your mom is right (think about it, they nearly always are!)

You are supposed to DECLARE that money as income, but it's unlikely any tax will actually be due on it, unless you already earn a bunch of other money.

Answer 7

techinally yes but the last time I looked any income under $120 is not reported. If you claim that dollar in winnings then you can claim your gambling losses (but you have to be reasonable about it otherwise you face an audit)

Answer 8

Typically, any income from a single source, that is less that $600 does not need to be declared. If you receive more than that, then it needs to be declared, and you will need to pay taxes on all of it.