When it comes to filing your taxes, most people are familiar with the usual income sources such as wages, salaries, and freelance income. But the IRS requires you to report and possibly pay tax on many less common income streams. These include jury duty pay, gambling winnings, prize money, awards, and even barter transactions. Failing to report these correctly can lead to penalties, audits, or lost refund opportunities. This guide breaks down how to handle these unusual sources of taxable income on your tax return.
Jury Duty Pay: Taxable and Reportable
If you were summoned and served on a jury during the tax year, you likely received a nominal daily stipend—commonly around $15–$50 per day. Though the amount may seem small, it is still considered taxable income by the IRS.
You should receive a Form 1099-MISC from the court if you earned $600 or more. Even if you did not receive this form, you must still report jury duty pay as “Other Income” on Schedule 1 (Form 1040), Line 8z.
Employer Reimbursement and Jury Pay
In some cases, your employer may pay your regular wages during jury service but require you to remit your jury duty pay to them. In such cases, you must still report the full jury duty pay on your return and then deduct the remitted amount on Schedule 1, Line 24h (Other adjustments).
Prizes and Awards: Yes, They’re Taxable Too
Winning a contest, sweepstakes, raffle, or lottery? The value of your prize must be reported as taxable income. This applies whether the prize is in the form of cash, a vacation trip, a car, or any other tangible reward.
Examples of Taxable Prizes:
- Cash winnings from a game show
- Gift cards or merchandise from sweepstakes
- Vacation packages awarded through raffles
- Scholarships awarded for non-qualified expenses (like room and board)
Prizes are typically reported to you on Form 1099-MISC if their value is $600 or more. You must include the fair market value (FMV) of non-cash prizes in your income.
Report this income on Schedule 1, Line 8z and transfer the total to Form 1040, Line 8.
Gambling Winnings: Don’t Roll the Dice with the IRS
Whether you won big in Las Vegas or at a local bingo hall, gambling winnings are fully taxable. This includes:
- Casino jackpots
- Lottery prizes
- Sports betting wins
- Raffle proceeds
- Poker tournament cash-outs
Casinos and gambling establishments issue Form W-2G for large winnings (e.g., over $1,200 from a slot machine), but you must report all gambling income, regardless of whether you receive a form.
Gambling losses can be deducted—but only up to the amount of your winnings, and only if you itemize deductions on Schedule A.
Bartering Income: Taxable Fair Market Exchange
Bartering—trading goods or services without using money—is a taxable transaction. For example, if a web designer builds a website for a dentist in exchange for dental care, both parties must report the FMV of the goods or services they received as income.
If you use a barter exchange platform (like a barter club), you’ll likely receive Form 1099-B showing the value of the exchanges. All barter income must be reported as ordinary income on your tax return.
Found Money or Unexpected Income
Believe it or not, even “found” money can be taxable in certain cases:
- Forgiven debts (e.g., credit card or mortgage forgiveness)
- Cash found and legally kept
- Insurance rebates or settlements (in some cases)
- Referral bonuses from financial apps or banks
Forgiven debts are usually reported to you on Form 1099-C. This income is typically taxable unless you qualify for an exclusion (like insolvency or bankruptcy). Be sure to consult a tax professional if you receive such forms.
Cryptocurrency Rewards and AirDrops
If you receive cryptocurrency through staking rewards, airdrops, or as a promotional gift, the IRS considers this taxable income. You must report the fair market value in U.S. dollars at the time you received it.
Include this under “Other Income” on Schedule 1, and maintain accurate records of transaction dates and values for future capital gain/loss reporting.
Scholarships and Fellowship Grants
Generally, scholarships used for qualified education expenses like tuition and required books are tax-free. However, scholarship funds used for non-qualified expenses—like room, board, or travel—are taxable and must be reported as income.
You’ll typically report these on Form 1040, Line 8 if they don’t qualify for tax exclusion.
Unemployment Compensation
Unemployment benefits, including any state unemployment insurance or federal programs like Pandemic Unemployment Assistance (PUA), are fully taxable at the federal level. You’ll receive Form 1099-G to include with your return.
Report the income on Schedule 1, Line 7 and carry over to your Form 1040.
How to Report These Unusual Income Sources
The IRS provides Schedule 1 (Additional Income and Adjustments to Income) to report most of these categories. Total these sources in Part I, then transfer the sum to Form 1040, Line 8.
Steps:
- Review all Forms 1099-MISC, W-2G, 1099-C, 1099-G, or 1099-B you received.
- List each unusual income source on Schedule 1, Line 8z (“Other Income”).
- Attach any required supporting documentation or worksheets.
- Transfer the total to Form 1040 and calculate your final tax.
Penalties for Not Reporting
Failing to report taxable income—even from small or unusual sources—can result in:
- Late payment penalties
- Accuracy-related penalties
- Interest charges on unpaid taxes
- IRS audits or correspondence inquiries
The IRS cross-checks information reported on your return against documents received from third parties. If you omit income that has been reported to the IRS, you’ll likely receive a CP2000 notice or audit request.
Conclusion
While most people think of taxable income as wages or business earnings, the IRS casts a much wider net. Jury duty pay, prizes, gambling wins, forgiven debts, cryptocurrency rewards, and bartering are all examples of less common but taxable income. Accurately reporting these sources helps you stay compliant, avoid penalties, and protect your refund. Use IRS forms and guidance carefully, and consider consulting a tax professional if your tax situation includes multiple unusual income streams.
