According to the Internal Revenue Service, you must report money from unlawful activities such as drug dealing on your tax return. In addition, the Internal Revenue Service has released advice on how to prepare 2021 tax returns ahead of the upcoming tax season, including the requirement money declaration acquired from illegal activities on taxes, the postmellinial.com reported.
All Earned Money Must Be Reported
On its website, the IRS also informs taxpayers that any money earned through unlawful activities, such as selling narcotics, must be reported on Form 1040, the same document that is used to report other income such as prize money and unemployment benefits. According to the IRS, stealing isn’t the only thing that should be reported; bribes and kickbacks should also be recorded. However, the IRS did not respond to a request for more information. Therefore, on their tax returns, they must likewise report any bribes received by a taxpayer
Exemptions
You won’t have to pay taxes on stolen goods if you return them to the person who stole them in the same year. If you find something valuable on the street, though, you must pay up. The bottom line is to double-check with your tax professional to ensure that all of your paperwork is in order. Avoid getting an unwelcome audit notice in the mail. For example, if a person steals property, they must “report its fair market value” as income unless they return it to its rightful owner within the same year, as stated on the IRS’s website.
According to Riana Linsky of Dark Horse CPA in Tucson, the IRS and state taxing authorities have a wide range of powers. If a taxpayer is subjected to an audit, they may be subjected to it for several years, making it a black hole for some taxpayers, kgun9.com wrote.
On Twitter, some mocked the IRS’s recommendations, questioning why criminals would file taxes in the first place and saying that individuals who steal stuff throughout the year had only a few days to turn them into taxable income.
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