Partners In Crime

By Ted Dieck | Recruiter’s View - | Jan 8, 2022

As you may know by now, the Feds want a piece of the action whenever you make money doing something illegal.  Most news outlets had great fun recently, observing that the IRS is demanding its percentage on bribes, kickbacks, stolen property, and drug dealing.

I generally try to confirm the accuracy of things I tell you in my posts and letters.  Typically, I’ll return to first sources and review original documents whenever possible.

That brought me to Publication 17 (2021), Your Federal Income Tax.  

Way down in Part One/Section 8/Other Income/ I found what I was looking for.  This grim, humorless document really does say, “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.”

I wanted to make some snarky comments at this point.  But I’m not going to do that.  I’m trying to be a better person.

Instead, I’m going to focus on helping you find these instructions, in case you need to report your own illegal income.

Everything in Section 8 is alphabetical.  That’s what threw me off. 

Finding Illegal Activities

So, you will find the Illegal Activities notes tucked between
Hobby Losses and
Indian Fishing Rights

See how that works?
It’s alphabetical.

There’s More 

Likewise, if you scroll down further, you may see…
Jury Duty
Kickbacks <<
Medical Savings Accounts

That middle one will show you guidance on income from kickbacks, bribes, and push money.  Jury Duty is not supposed to involve any of that.

Toward the bottom of Section 8, you can find…
Sharing/Gig Economy
Stolen Property <<
Transporting School Children

Again, Stolen Property might include an element of Sharing.
But we would hope that Transporting School Children would never be involved.

It all begins to make sense, once you understand the bureaucratic mind.