IRS Says Income Made From Illegal Activities Must Be Reported On Tax Returns

You could get pinched for tax evasion if you don’t report income from illegal activities.

It’s tax time for Americans, leaving many to file their income tax. Many have questions about what income must be included on your tax return. KSN reports that the IRS recommends that all income, even money from illegal activities, be reported.

“Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity,” the IRS website reads.

The IRS recommends taxpayers report any stolen property at full market value as income in the year they acquired it. The only stipulation is returning the property to the rightful owner.

This guideline is referred to as the “All Capone rule.” It is best to report all income, even illegal activities. That way, if you are nabbed by law enforcement, you avoid the risk of the IRS targeting you for tax evasion.