Yeah, the legality of the source of the gain or income is irrelevant in regard to taxation.
There’s actually no line in the 1040 specifically for income arising from illegal activity, no box to check or anything, so it’s hard for the IRS to even filter returns with that criteria.
Most criminals with significant income from illegal activity still have to worry about the random audit or being the focus of interdepartmental attention so many do pay taxes and have a decent backstory to explain how they pay their mortgage, but money laundering is a more common way to go about as opposed to listing a whole bunch of vague shit as other income (which would raise quite a few questions if their file was pulled).
Fun movie trivia: in The Irishman, De Niro’s character, a hitman, claimed to ‘paint houses’ for a living due to his ability to furnish receipts for things like rollers, rags, cleaning supplies, and drop cloths. Probably bought a lot of paint too and handed it off to be tossed it in some dumpster
They tried that and it was previously struck down.
Don’t you have to state how much money you made illegally on your taxes?
Yeah, the legality of the source of the gain or income is irrelevant in regard to taxation.
There’s actually no line in the 1040 specifically for income arising from illegal activity, no box to check or anything, so it’s hard for the IRS to even filter returns with that criteria.
Most criminals with significant income from illegal activity still have to worry about the random audit or being the focus of interdepartmental attention so many do pay taxes and have a decent backstory to explain how they pay their mortgage, but money laundering is a more common way to go about as opposed to listing a whole bunch of vague shit as other income (which would raise quite a few questions if their file was pulled).
Fun movie trivia: in The Irishman, De Niro’s character, a hitman, claimed to ‘paint houses’ for a living due to his ability to furnish receipts for things like rollers, rags, cleaning supplies, and drop cloths. Probably bought a lot of paint too and handed it off to be tossed it in some dumpster
You’re supposed to in the US, yes.