Spencer Davis
Other Income is generally taxable income that is often considered uncommon; this type of income is reported on Line 8 of Schedule 1 and Form 1040. It includes earnings from prizes, awards, and gambling winnings. Even bartering or exchanging goods and services without using money can be considered other income.
Remember:
- Self-employment income is NOT reported as Other Income. Even if you get a 1099-MISC or 1099-NEC, ensure you don't confuse self-employment income with Other Income.
- Nontaxable income is also NOT considered Other Income. Income that falls into the category of Other Income is always taxable.
There are generally six primary types of income: wages or salary, retirement, home or property rental, business profit, investments, and a blanket category for income from other sources simply known as Other Income.
Read below for the definition and meaning of Other Income. Do you have income from nonemployment that may be considered Other Income? Let the eFile Tax App work for you; report your income, and we will determine if it is taxed as Other Income and report it on your IRS and state forms.
What Is Other Income?
Other
Uncommon
Income
We use the term "Other Income" as a category; it is different than referring to income as just other income as a different type of income. "Other Income" is its own line entry on the federal Schedule 1. For example, on the Schedule 1, Line 8 is Other Income and has 17 items, including the examples below, plus an additional line for other income not listed that a taxpayer can use to input a type of income manually.
Other Income is money or income generated from activities unrelated to business, work, or performing services. Generally, this is income not from wages, self-employment, retirement, home or property rentals, or investments; from a tax perspective, this is any income not reported on a W-2 or 1099 form. When you are employed or sign a contract to perform temporary or freelance work, you will receive a tax form for this income.
This is taxable income in exchange for your services as an employee or contractor. However, there are many situations where you receive money that does not fall into this category and may be considered Other Income.
Examples of Other Income
All of the following kinds of income are taxable and will be reported on Schedule 1, Line 8:
- Alaska Permanent Fund dividends (generally reported on a 1099-MISC) - If your only Other Income is from Alaska Permanent Fund dividends, you might qualify for the free eFile.com Federal Edition.
- Alternative Trade Adjustment Assistance (ATAA) or Reemployment Trade Adjustment Assistance (RTAA) payments (generally reported on a 1099-G).
- Barter income (the fair market value of goods or services exchanged by two parties is taxable; both parties should report the full value received from the transaction as other income).
- Canceled debts (usually reported on a 1099-C) are often reported as Other Income.
- Cash for Keys program income from a financial institution offered to you to expedite the process of foreclosure (generally reported on 1099-MISC).
- Dividends on insurance policies if the amount is more than the total of all your premiums.
- Foreign earned income exclusion via Form 2555 - this exclusion is applied when you earn foreign income as a United States citizen. The eFile Tax App will help you with this complicated form and eFileIT with your return.
- Gambling winnings, including awards, prizes, jackpots, and contest winnings. Your winnings and any tax withheld may be reported on W-2G, depending on the amount you won and the type of gambling, but the full amount is taxable regardless of whether you receive a W-2G. You may deduct gambling losses up to the amount of your gambling winnings, but you must list all of your winnings on Line 8.
- Hobby income (from an activity not performed for profit; you can deduct hobby expenses up to the amount of your hobby income).
- Jury duty pay (reported on a 1099-MISC if it totals $600 or more, but any amount is taxable; you can deduct jury duty pay if you have to pay it to your employer).
- Losses on certain corrective retirement plan distributions of excess deferrals.
- Net Operating Loss (see details below).
- Nonbusiness rental income (earned from renting personal property; if you engaged in the rental for profit but were not in the business of renting, it is reported as other income, and you can deduct expenses related to this rental).
- Nonbusiness credit card debt cancellation.
- Prizes and awards, including Olympic and Paralympic medals or USOC prize money.
- Recapture of a charitable contribution deduction (if the charitable organization disposes of the donated property within three years or due to the contribution of a fractional interest in tangible personal property).
- Recovery of a deduction that you claimed in an earlier year.
- Recoveries (reimbursem*nts you received for previously deducted expenses, such as medical expenses, employee expenses, and other tax deductions).
- Stock options - certain stock options (statutory vs. nonstatutory) may result in taxable income, which would be reported as Other Income.
- Taxable distributions from:
- An ABLE account
- A Coverdell Education Savings Account (ESA) or a qualified tuition program (QTP) (generally reported on a 1099-Q)
- A health savings account (HSA) or an Archer MSA. These are generally reported on a 1099-SA; you can deduct qualified contributions from an Archer MSA. Distributions are only taxable when spent on a nonqualified expense or if you did not remain an eligible individual during the testing period.
- Taxable portion of disaster relief payments.
- Section 951(a) inclusion, Section 951A(a) inclusion, and Section 461(I) excess business loss adjustment.
Generally, Other Income is income that does not belong under the many categories on a tax return. On various tax forms, like Form 1040 or Schedule 1, there are specific lines for various types of income, such as retirement income, unemployment compensation, or self-employment income. If you receive income not reported on any specific line on a tax form, like those in the list above, you will likely report this as Other Income.
Confusing? We get IT! On eFile.com, you will answer simple questions about your various types of income, and we will determine how it is taxed. If you have any income you're unsure about, report it on the eFile App to see if it is considered Other Income - sign up free here.
Net Operating Loss (NOL)
If you have a net operating loss deduction carried over from a previous year, you can deduct the amount from the other income entered on Line 8 of Schedule 1. eFile.com will fill out the form correctly for you if you have an NOL deduction.
Learn more about Net Operating Loss in Publication 536.
Prepare, e-File Your Return with Other Income
Other Income is reported on Line 8 of Schedule 1. Our price for preparing Form 1040 and any schedules you need is the lowest around; the accuracy, ease of use, and peace of mind are worth it!
Review the services of eFile.com here before you sign up for free. Start your Income Tax Return and report your other Income as it applies to your specific tax situation. PrepareIT Yourself, but not Alone!
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