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Filing your tax return on time does not always mean avoiding surprises. Many taxes are triggered by everyday financial decisions that people may not associate with tax bills. If you want to avoid wasting money, it helps to understand where unexpected tax obligations tend to hide. These overlooked taxes can quietly increase what you owe, even when your paperwork is otherwise correct.
Here are several common taxes that may catch people off guard every year.
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Use tax for out-of-state or online purchases
If you buy goods online or from an out-of-state seller and no sales tax is charged, your state may still expect payment through use tax. Use tax exists to ensure local retailers are not disadvantaged when competing with sellers who do not collect sales tax at checkout.
It commonly applies to large purchases, like electronics and furniture, but smaller transactions also count. Many states include a use tax line on their tax return, even though compliance rates remain low.
Early withdrawal penalties from retirement accounts
Withdrawing money from an IRA or 401(k) before age 59½ usually results in both income tax and a 10% early withdrawal penalty. For example, withdrawing $30,000 could trigger immediate withholding, plus an additional $3,000 penalty at tax time, depending on your bracket.
Beyond taxes, early withdrawals reduce future retirement growth by permanently shrinking your investment base. Although limited exceptions exist, retirement funds are typically one of the most expensive sources of cash.
Self-employment taxes if you work for yourself
If you earned $5,000 as a rideshare driver or made $10,000 from freelancing, the IRS requires you to pay taxes on that income. Once self-employment income reaches $400, you owe self-employment tax of 15.3%, covering both Social Security (12.4%) and Medicare (2.9%).
Unlike traditional employees, freelancers pay both the employee and employer portions themselves. While you can deduct half of this tax when calculating adjusted gross income (AGI), the obligation may still catch many side-income earners off guard.
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Taxes owed on debt forgiveness
When a lender forgives part of a loan or credit card balance, the forgiven amount is often treated as taxable income. The IRS considers canceled debt similar to receiving money, even though no cash changes hands.
Starting in 2026, student loans forgiven through income-driven repayment plans may again become taxable after a temporary federal exemption under the American Rescue Plan expired on December 31, 2025.
'Kiddie tax' on your child's investment account
Investment income earned in a child's custodial account can be taxed at the parent's rate instead of the child's. For 2026, the first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child's rate, and amounts above $2,700 are taxed at the parent's marginal rate.
This rule primarily affects Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) accounts holding interest, dividends, or capital gains. Families sometimes may discover this tax only after investment income grows beyond expectations.
Nanny tax
Hiring household help can make you a household employer with payroll tax responsibilities. If you pay a caregiver more than $3,000 in 2026, you may owe Social Security, Medicare, and unemployment taxes.
Misclassifying a nanny as an independent contractor can potentially lead to back taxes, penalties, and interest. While these obligations may surprise many families, properly reporting wages can also unlock valuable dependent care tax credits. This may include the Child and Dependent Care Credit, which is worth between 20% to 35% of $3,000 in expenses ($6,000 if you claim two or more dependents).
Taxes owed on bartered services
Exchanging services instead of cash does not eliminate tax obligations. The IRS requires both parties in a barter transaction to report the fair market value of what they receive as income.
For example, if you typically charge $10,000 for your service and then trade it for a service worth $10,000, both parties need to report $10,000 as income. Bartering income may also be subject to self-employment tax when tied to business activity.
How to keep track of surprise taxes
There are several smart ways to avoid the impact of unexpected taxes.
- Maintain detailed records: Keep receipts, contracts, and payment records throughout the year to avoid having to organize all your transactions when it comes time to file. The taxpayer is required to have proof in case of an IRS audit.
- Work with a tax professional: Complex income sources and life changes often benefit from professional guidance before filing season.
- Set aside funds consistently: Reserving roughly 25% to 30% of variable income can help reduce stress when unexpected tax bills appear.
Bottom line
Many taxes that increase your bill may be tied to life events rather than filing mistakes. Side income, caregiving arrangements, debt relief, and investment growth can all trigger tax obligations that feel unexpected.
Understanding where these taxes originate can help you prepare yourself financially, reduce surprises, and make more informed decisions throughout the year as your financial picture evolves.
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