I have unreported income from several years ago. How do I report it on my tax return?

On: May 17, 2019

Unreported income is huge deal to the IRS. The agency recently estimated that the U.S. loses hundreds of billions per year in taxes due to unreported income. Considering the amount of lost revenue, it’s not surprising that the IRS has a process for determining unreported income. The IRS is more than happy with just about any method you use to report unreported income. In my dealings with cash income and expense clients, the IRS has accepted handwritten ledgers with no bank deposits or receipts. When asked, my clients have responded that they do not keep a bank account or keep receipts. This, in itself, is not a crime. While IRS auditors may not have been happy, they accepted it as the only thing available. I have experienced this with truck drivers to independent music promoters to illegal immigrant drug dealers trying to come clean. The fact you are trying to pay your taxes in good faith goes a long way. Remember: Al Capone did not go to jail for murder and illegal alcohol sales, he went for tax fraud. The IRS doesn’t care, as long as you pay your taxes.