If You Neglect to Declare Income from Any Source, You'll Be in Trouble with the IRS
There are two basic ways in which an ordinary Oklahoma citizen can cheat on his taxes: by claiming excessive, inappropriate, or completely made-up deductions; or by not declaring his income in the first place. Both techniques are ill-advised, but if you're caught fiddling with your deductions, at least you either can claim ignorance of the law or simply admit you made a mistake. Not declaring your income, however, is an extremely serious offense in the eyes of the IRS, and may result in substantial penalties, interest payments, and even jail time.
The IRS Defines “Income” as Money Derived from Any Source
One of the reasons so many people kind of, sort of forget to declare a $10,000 windfall on their annual tax return is that they are under the false impression that “income” only applies to money earned from work. In fact, the IRS requires you to declare:
• Gambling winnings, either in Las Vegas or elsewhere (these can, however, be partially offset by your gambling losses)
• Cash prizes earned from contests or sweepstakes
• Proceeds from the sale of your house, or other major possessions (though only over a certain dollar amount)
• “Off the books” money earned from odd jobs, if these add up to a significant source of income
• Certain government benefits, like unemployment, if these are deemed to be taxable
Granted, some of these sources of income are more easily traced by the government than others. If you are paid in cash for a variety of jobs, odds are slim that the IRS will catch up with you (or even care, provided you're not making more than a few thousand dollars a year). But, if you collect government benefits, win a sweepstakes, or strike it rich in Vegas, the entity which gives out the money is required to file a form with the IRS. If, at the end of the year, your numbers don't match those on file with the government, you probably will be audited. And, if you neglect to declare large amounts of income, you may even be prosecuted.
Is the IRS Pursuing You for Undeclared Income? Call the Law Firm of Travis W. Watkins, PC
At the law firm of Travis W. Watkins, PC, we know the IRS takes undeclared income very seriously, and will pursue you with all the ammunition in its arsenal if you choose not to declare tens of thousands, hundreds of thousands, or millions of dollars' worth of income. Questions? Call our Oklahoma tax professionals today at 800-721-7054 for a free consultation!