Halloween evokes spooky images of ghosts and goblins. These specters may not be visible to the eye, but rumor has it, their eerie presence can be felt.
Similarly, so-called “phantom income” is money that you don’t actually pocket, but the IRS still treats those funds as taxable income.
Nobody likes getting a larger than expected tax bill, especially on money they never actually had, but because the money (or “imputed income”) shows up on income statements, it’s fair game for Uncle Sam.
These situations are not very common, but here are a few examples of phantom income: