Other Income

Taxpayers earning taxable income from a source not reported elsewhere on Form 1040 (Line 7 – Line 20) or on any associated schedules can list such income on the form’s Line 21 miscellaneous section. To do so, the taxpayer must total all sources of “other income” and enter the dollar amount accordingly (if necessary, include a statement describing any such income). For more details, see “Miscellaneous Income” in Publication 525.

Taxable income: Only taxable income must be listed on Line 21. The most common examples of taxable income include:

-Most prizes and awards
-Jury duty pay (see the Line 36 instructions, page 37).
-Gambling winnings, including lotteries, raffles, a lump-sum payment from the sale of a right to receive future lottery payments, etc. (for details on gambling losses, see the instructions for (Schedule A, line 28)
-Reimbursements or other amounts received for items deducted in an earlier year, such as medical expenses, real estate taxes, general sales taxes, or home mortgage interest (see “Recoveries” in Publication 525).
-Income from the rental of personal property if you engaged in the rental for profit but were not in the business of renting such property (see the Line 36 instructions, page 37).
-Income from an activity not engaged in for profit (see Publication 535).
-Loss on certain corrective distributions of excess deferrals (see “Retirement Plan Contributions” in Publication 525).
-Dividends on insurance policies if they exceeded the total of all net premiums paid for the contract.
-Canceled debts (these amounts may be shown in box 2 of Form 1099-C). However, part or all of the income from the cancellation of debt may be nontaxable (see Publication 4681).
-Recapture of a charitable contribution deduction relating to the contribution of a fractional interest in tangible personal property (see “Fractional Interest in Tangible Personal Property” in Publication 526).
-Recapture of a charitable contribution deduction if the charitable organization disposes of the donated property within 3 years of the contribution (see “Recapture if no exempt use” in Publication 526).
-Taxable distributions from a Coverdell education savings account (ESA) or a qualified tuition program (QTP) (see Publication 970 to determine the tax status of such distributions – nontaxable distributions from these accounts, including rollovers, need not be reported).
-Taxable distributions from a health savings account (HSA) or an Archer MSA (see Publication 969). Some otherwise nontaxable income earned under an HSA may nonetheless be deemed taxable if the taxpayer did not remain an eligible individual during the testing period (See Form 8889, Part III).
-Taxable part of disaster relief payments (see Publication 525)
-Alternative trade adjustment assistance (ATAA) or reemployment trade adjustment assistance (RTAA) payments (these payments should be shown in box 5 of Form 1099-G).
-Alaska Permanent Fund dividends

Net Operating Loss (NOL) deduction: Taxpayers may offset any Line 21 income with a proper NOL deduction from an earlier year. To do so, simply subtract the deduction from the summed income total and enter the resulting value on Line 21 (if the result is less than zero, enter it in parentheses and enter “NOL” on the dotted line next to Line 21). See Publication 536 for details.

Nontaxable income: Not listed above are various types of nontaxable income. Such income is not required to be listed on Form 1040. The most common examples of nontaxable income include:

-Child support
-Life insurance proceeds received as a beneficiary of a decedent’s insurance policy (other than from certain employer-owned life insurance contracts).
-Gifts and bequests (gifts or bequests from a foreign person of more than $14,723 may trigger reporting requirements on Form 3520, Part IV – consult Form 3520 Instructions)
-Payments received to help pay a mortgage loan under the HFA Hardest Hit Fund or the Emergency Homeowners’ Loan Program (or a similar state program).
-Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program.

NOTE: Do not report on this line any income from: self-employment, income derived as a notary public, or non-employee compensation (usually shown on Form 1099-MISC).

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