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Other income: Just what is it?

 

Do you have a “junk drawer” as a catchall where you toss items that don’t seem to have a specific place?

The IRS provides Line 21, Other Income, of Form 1040 as a kind of catchall used to report any taxable income not reported elsewhere on your return or other schedules.

This line is where you list the type and amount of miscellaneous, or other, income. Some examples of income to report on Line 21 include the following:

1. Most prizes and awards

2. Jury duty pay

3. Gambling winnings, including lotteries and raffles

4. Recoveries of items deducted in earlier years, for example, various itemized deductions

5. Income from the rental of personal property if you were engaged in the rental for a profit but were not in the business of renting such property

6. Income from an activity not engaged in for profit

7. Taxable distributions from a Coverdell education savings account or a qualified tuition program

8. Taxable distributions from a health savings account or an Archer medical savings account

9. Canceled debts on something other than your personal residence, for which canceled debt is not taxable

10. Net operating loss (NOL) deduction

11. Alaska Permanent Fund dividends

Jury duty pay, recoveries, gambling winnings and NOL are some of the more common items to include on Line 21. All are income items except for NOL, which reduces the amount of income on this line.

NOL is a net operating loss from a prior year carried forward. It means you had more losses than income in a particular year. You are allowed to carry forward a loss for 20 years or until it is used up.

For more detailed information, refer to the 1040 instructions for Line 21.

©2015 CPAmerica International

 






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