The IRS wants you to report illicit income
Did you steal a car in 2022? How about taking a bribe? If you did, the IRS says you should make sure you report it on your taxes.
The requirements can be found in “IRS Publication 525 Taxable and Nontaxable Income,” amid other missives to report income earned from jobs in the gig economy and what to do about taxable alimony payments.
“If you steal property, you must report its FMV (Fair Market Value) in your income in the year you steal it, unless in the same year you return it to its rightful owner,” the publication says.
How about if you receive a bribe? “Include it in your income,” the IRS says.
And if you’re dealing illegal drugs or caught up in other illegal activities?
In that case, the IRS publication says, jot your earnings on line 8z, Schedule 1 of your 1040 form, “or on schedule C ... if from your self-employment activity.”
And don’t forget to report any kickbacks you took in the course of doing business.
“Kickbacks, side commissions, push money, or similar payments” also go on Schedule 1 or Schedule C.
An IRS spokesman said he was not aware of the agency ever publishing statistics on how many taxpayers actually report illicit income. But if you do, the agency is not turning the information over to law enforcement.
“The federal tax law prevents federal employees form sharing tax return information,” he said.
Can I keep stolen stuff I report?
In past years, Twitteri has had a field day with the official requirements to report the value of your ill-gotten gains.
“Tax szn is around the corner,” read a tweet from @litcapital that went viral in 2021. “Remember to report your income from illegal activities and stolen property to the IRS.”
“If I steal a bunch of tvs from walmart and a homeless man steals them from me can i write that off as a loss?” read another tweet posted during that previous tax season.
And yet another tweeter wondered if coming clean to the IRS meant you could keep whatever you’d swiped.
“So once you report your stolen stuff you legally get to keep it right?” read the post. “Asking for a friend.”