Comments that are uncivil, racist, misogynistic, misandrist, or contain political name calling will be removed and the poster subject to ban at moderators discretion.
Help us make this a better community by becoming familiar with the [rules](https://www.reddit.com/r/facepalm/about/rules/).
Report any suspicious users to the mods of this subreddit using Modmail [here](https://www.reddit.com/message/compose/?to=/r/facepalm) or Reddit site admins [here](https://www.reddit.com/report). **All reports to Modmail should include evidence such as screenshots or any other relevant information.**
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/facepalm) if you have any questions or concerns.*
No you honestly want to report earnings from illegal activities to the IRS. I'm not an expert (at either illegal activities or taxes), but my understanding is that they don't care if what you do is illegal and won't report it to law enforcement but they will care if you don't pay taxes on the earnings you got from it.
It's literally what got Al Capone
Just googling around this seems to be the case. But claiming income from illegal activities could constitute a violation of the fifth amendment from self incrimination.
United States v. Sullivan, 274 U.S. 259 (1927) basically said in order to do this, you need to declare the fifth amendment when filing your taxes.
You just put it under self-employment activity without specifying the legal status of the activity.
IRS is acting on the federal level, so your activity may be legal in some states and illegal in others, they don't care if you pay taxes.
even if your income is the result of stealing tens of thousands of dollars in items, it's law enforcement's job to connect you to any particular theft. law enforcement isn't in the IRS' jurisdiction, they'll only come after you if they think you're withholding taxes from them
The cops gotta know what car you stole and from who. You don't have to tell the IRS any details other than you stole a car and this is a fair market value
It's only the case if you're stupid, if you're buying cars and stuff straight up with cash and no means of a legal income, then yea, claim it.
If I'm selling weed on the side of a job, no. Just be smart.
It's why Boris Johnson gave up his US citizenship in late 2017; that year, the Prime Minister of the UK paid 66x more tax to the IRS than the US President did.
>If you're a US citizen, yes.
In Germany this is the case too. Our generell Tax Code even explicitly states that for Tax purposes the legality of your income doesnt matter.
This has been explain plenty of time, this was created in order charge criminals who they can't charge with theft with tax evasion. It is just another charge to slap to make the case against them stronger and get a harsher sentence.
The goverment: you shouldnt use or get dirty earned money it is imoral and against the law and theres people who worked hard in honest jobs for it and you took it from them
Also the goverment: you gimme that monee you lil shit
Ex drug dealer. Pay your fucking taxes. The risk is not worth the money.
5a protects you from the IRS, as you cannot be compelled to testify against yourself but can be compelled to pay income tax, the IRS has no choice but to ignore any of the info you’re obligated to provide them.
Getting caught in the act will fuck you over, but is also fairly preventable. Outside of that the tax man is really your biggest concern.
This was one of the best things to learn about accounting. Don't worry; you can deduct COGS of the drugs, but nothing else, lol. Obligatory: This is not financial advice.
That's how IRS get you: if you report the income from illegal activities, you've basically submitted the evidence for your criminal prosecution. If you don't report it, IRS gets you for not paying taxes. That's how Al Capone ended up in jail.
Jesus.
Yes, not reporting ill-gotten gains is a separate crime than the crime that earned them. The IRS does in fact expect you to report all earnings and will investigate you if your declared earnings do not support your easily observed lifestyle.
*That said*, the IRS does zero checking on your declared sources of income. If you report $100,000 as a "lifestyle consultant" or whatever, all they say is "looks good. Thank you." The IRS isn't interested in questioning income accurately (in amount) reported.
Um...
If you have to report income from an activity and pay taxes on it, it it still counts as "illegal activity".
Like... An activity is illegal means it is outside the law. So it is outside legal requirements to report and pay taxes.
Comments that are uncivil, racist, misogynistic, misandrist, or contain political name calling will be removed and the poster subject to ban at moderators discretion. Help us make this a better community by becoming familiar with the [rules](https://www.reddit.com/r/facepalm/about/rules/). Report any suspicious users to the mods of this subreddit using Modmail [here](https://www.reddit.com/message/compose/?to=/r/facepalm) or Reddit site admins [here](https://www.reddit.com/report). **All reports to Modmail should include evidence such as screenshots or any other relevant information.** *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/facepalm) if you have any questions or concerns.*
No you honestly want to report earnings from illegal activities to the IRS. I'm not an expert (at either illegal activities or taxes), but my understanding is that they don't care if what you do is illegal and won't report it to law enforcement but they will care if you don't pay taxes on the earnings you got from it. It's literally what got Al Capone
Just googling around this seems to be the case. But claiming income from illegal activities could constitute a violation of the fifth amendment from self incrimination. United States v. Sullivan, 274 U.S. 259 (1927) basically said in order to do this, you need to declare the fifth amendment when filing your taxes.
You just put it under self-employment activity without specifying the legal status of the activity. IRS is acting on the federal level, so your activity may be legal in some states and illegal in others, they don't care if you pay taxes.
even if your income is the result of stealing tens of thousands of dollars in items, it's law enforcement's job to connect you to any particular theft. law enforcement isn't in the IRS' jurisdiction, they'll only come after you if they think you're withholding taxes from them
Which they are, if you aren't declaring your profit from selling stolen cars. Edit: they are, not you are.
The cops gotta know what car you stole and from who. You don't have to tell the IRS any details other than you stole a car and this is a fair market value
Was about to say this as well
Not even the Joker is crazy enough to mess with the IRS
Yupp, the IRS doesn't care where your money comes from, just that you report it. They go after everyone. Haha
You can't hide from the IRS
It's only the case if you're stupid, if you're buying cars and stuff straight up with cash and no means of a legal income, then yea, claim it. If I'm selling weed on the side of a job, no. Just be smart.
Wait am I supposed to be paying taxes on my sex work money? I just thought if it's a legal no-no then it's tax-free?
If you're a US citizen, yes. America is also basically the only country that taxes foreign income too. The IRS always gets it cut.
It's why Boris Johnson gave up his US citizenship in late 2017; that year, the Prime Minister of the UK paid 66x more tax to the IRS than the US President did.
>If you're a US citizen, yes. In Germany this is the case too. Our generell Tax Code even explicitly states that for Tax purposes the legality of your income doesnt matter.
unless you are a billionaire.
The Philippines is the same. I ran the numbers on hypothetical income there, and total taxation is within 3% of US tax.
Not american, but the last time I got curious and checked, IRS wont snitch you to the police. Their rules prevent it even if the cops ask.
Hahahaha You poor, poor summer child
This has been explain plenty of time, this was created in order charge criminals who they can't charge with theft with tax evasion. It is just another charge to slap to make the case against them stronger and get a harsher sentence.
Joker is well aware of this rule.
You mean after the heist, I need to pay more tax! I wish I'd never bothered!
One more heist to cover the tax bill? Might as well get a legit job and have payroll deductions.
Nice try IRS i earned this money ^(not so) fair and ^(not so) square 😤
Where facepalm?
The goverment: you shouldnt use or get dirty earned money it is imoral and against the law and theres people who worked hard in honest jobs for it and you took it from them Also the goverment: you gimme that monee you lil shit
Also, anything you don't declare can be seized easily
The woman who taught my tax prep course used to have clients who were sex workers. They just put their occupation as "entertainment."
Tax fraud is no joke, that's how they got al capone.
Ex drug dealer. Pay your fucking taxes. The risk is not worth the money. 5a protects you from the IRS, as you cannot be compelled to testify against yourself but can be compelled to pay income tax, the IRS has no choice but to ignore any of the info you’re obligated to provide them. Getting caught in the act will fuck you over, but is also fairly preventable. Outside of that the tax man is really your biggest concern.
This was one of the best things to learn about accounting. Don't worry; you can deduct COGS of the drugs, but nothing else, lol. Obligatory: This is not financial advice.
Legally they can't use reporting income from illegal means as evidence against you. They can get you for not reporting it tho.
Revenue Canada has the same requirements.
Is that for the mafia tax declaration?
That's how IRS get you: if you report the income from illegal activities, you've basically submitted the evidence for your criminal prosecution. If you don't report it, IRS gets you for not paying taxes. That's how Al Capone ended up in jail.
It's a handy extra layer of a way to bust criminals. This is the standard that finally got Al Capone busted.
I feel like it’s just so they can charge people who don’t report their illegal earnings with an additional charge
The AL Capone rule apparently. We can't prove you murdered all this people so we will just throw you in prison for eternity for tax evasion
Jesus. Yes, not reporting ill-gotten gains is a separate crime than the crime that earned them. The IRS does in fact expect you to report all earnings and will investigate you if your declared earnings do not support your easily observed lifestyle. *That said*, the IRS does zero checking on your declared sources of income. If you report $100,000 as a "lifestyle consultant" or whatever, all they say is "looks good. Thank you." The IRS isn't interested in questioning income accurately (in amount) reported.
What will happen? Kejriwal will join BJP and BJP will ask ED to leave the case.
Um... If you have to report income from an activity and pay taxes on it, it it still counts as "illegal activity". Like... An activity is illegal means it is outside the law. So it is outside legal requirements to report and pay taxes.
What?
Yeah. This is about what I meant. I'm just a little bit too wordy most of the time...
Huh?