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10mo ago

You can also take deductions for costs relating to criminal activity!

In case you don't believe me about the deductions...

117 comments

Completely seriously; while I’m sure essentially no one actually does, the IRS is not going to like network with the FBI or your local police department if you, for some reason, decide to pay taxes on your weed sale profits. Unless you report that you’re selling sex slaves they seriously could not care less.
I know it’s just a joke image but I do love the idea of someone who makes much of their money illegally but also has this very honorable commitment to paying their fair share in taxes.
- I know it’s just a joke image but I do love the idea of someone who makes much of their money illegally but also has this very honorable commitment to paying their fair share in taxes.
  If you're convicted of criminal activity you'd be smart to include that in your taxes. The last thing you need is to be convicted of tax fraud in addition to getting convicted of drug trafficking. If the government already has a record of you profiting from criminal activity, make sure you give them their cut.
  
  As the joker once said:
  I'm crazy enough to take on batman, but the IRS? No thank you
- More specifically the IRS field book discourages reporting illegal income to other agencies for basically everything besides terrorism. Also, when you file taxes there's a reason there's an "other income" field. Nobody expects you to list "MS-13" as your employer. You can report money earned from illegal activities to avoid additional federal charges being tacked on
  
  Exactly. I’ve seen such a gigantic rise in like “conspiracy-everything” posts online (wherein people seemingly assume that everything ever done by the government is in some way a poorly concealed conspiracy) and i think anyone who has actually worked under government funding can pretty quickly attest that this just… isn’t how things work.
  All these “little conspiracies” operate under the assumption that the US government is this hyper-connected, ultra advanced and professional shadowy room where everyone is out to get non-government employees for vague purposes (“they just want to have control… man…”.)
  When really, 99% of government employees are like some guy or gal you went to high school with who is working in a cubicle because the benefits are pretty decent
  Anyway, not to make the joke post too serious. I just always worry the naively minded might take posts like this too seriously lol
  
  And reporting "other income" wouldn't flag you as a likely criminal anyway, unless it was a massive amount. They don't know if you got it from selling weed, picking pockets, or mowing your neighbor's lawn (no, Bill is not going to submit a form 1099 for you, he's just going to hire a professional lawn service instead if you're going to be weird about it).
  
  IRS isn't a snitch
- …I do love the idea of someone who makes much of their money illegally but also has this very honorable commitment to paying their fair share in taxes.
  There’s, perhaps, a more practical explanation. As I’ve read before (in some other phrasing): If you’re going to commit a crime, commit only one at a time.
  In this case, if you’re going to make your money illegally, for goodness’ sake, don’t evade taxes.
  
  Seriously though, some people have almost pulled off some crazy illegal shit and then got caught because a headlight was out or someone was doing something stupid. If you're going to commit crime, one at a time.
  
  This is absolutely it.
  Its just one less way that they can come at you, it also means its harder for them to confiscate your property as proceeds of crime.
  
  Also on virtually every gangster or crime movie/series there is either a bad guy getting caught by irs(?) agents for tax evasion, or plays it super safe and pays them diligently to avoid that very scenario.
  
  Wasn't that one woman who lied about cancer and stole hundreds of thousands of dollars fully brought down for tax evasion because they couldn't really get her on much else? The scamanda woman
- Actually what happened is that some criminal got caught. And in addition to everything, he was accused of tax fraud. He successfully argued though, that because there wasn’t a field to properly declare his taxes, rhat he would be committing fraud by lying about his income, and as such had no option. This is what led to those fields to exist
  
  Kudos to whoever that was. It's not easy to beat the IRS
- The premise of it is basically to have an easier way to prosecute organized crime since those folks rarely are keeping honest books.
- I know it’s just a joke image
  It isn't. (pdf)
  
  I am obviously not claiming the image is fake, I’m claiming it’s being used in a joking context
- Also you're allowed to plead the fifth on the origin of the income IIRC, though honestly that's just as likely to get you looked at by the FBI/local constabulary.
  
  On the other hand if you're making enough money illegally to feel the need to declare it on your taxes (either for ethical reasons or because you don't want to get done like Al Capone) law enforcement is probably already looking at you.
  
  The IRS doesn't report it to the FBI because that's not their job. If you're already under investigation and the FBI asks, they'll hand over the info, but they won't initiate anything, they just want their cut.
- This is just my D&D character. He's an accountant for a thieves' guild
- Slightly related question: is money laundering, in itself, illegal?
  Like, say I have $1000 from my regular W-2 job, taxes paid.
  I launder it through a bunch of accounts. Is that illegal?
  Or is it the mixing with dirty funds that makes it illegal?
  
  Not sure you can “launder” clean money.
  If you get paid money legally and just… transfer it a bunch through various banking accounts or similar. That is obviously not illegal in any way.
  If you get paid money legally and then say, “buy a lot of car washes” at the car wash your cousin owns and then he pays you the money back and you two don’t report that to the IRS, that would be tax fraud (though laws on “gifting” money get pretty vague)
  Basically, it’s really hard to somehow illegally “launder” clean money
  
  If it's legal money, then you aren't laundering it. Transferring money you've obtained legally is just transferring money. It's only money laundering by definition if the money was illegally gained.
- … so far. Just wait til fascists are in control, and they kill all social programs then reallocate those resources to shit like that. The German government did that in the late 30s. They started using all government and private records to root out undesirables.
  Ten years ago I wouldn’t have worried either, but now? I wouldn’t give my information to anyone.
- The grifters have succeeded 100% if you think paying taxes is honourable in any way shape or form, especially in a declining empire that fields the most onerous army in history.
  
  I like clean water, good weather forecasts, and I want to fix the bridges.
  
  Yes, a good chunk of the American tax income goes to pretty bad stuff, but A. not all of us are American, and B. not all of that tax goes to bad stuff
  
  Idk man I’ve worked in social services under a multitude of government funded grants and I’m pretty sure tax evasion is extremely bad for many of the homeless veterans / abused children / etc I’ve worked with who are dependent on said grants.
  
  what the hell does decline have to do with the morals of it? In any case, while there are certainly misused funds, the truth of the matter is that it is vitally important to keep society functioning, and that doing this requires a lot of money. If not taxes, where else do you propose this funding come?

It sounds odd but there was a Supreme Court about it. Essentially someone claimed they shouldn't have to pay taxes on the profits of crime and the Court ruled they did. So they had to create a way for people to do that. For what it is worth, the 5th amendment protects you from incriminating yourself, so you are allowed to decline to provide the details of where the money came from, but it's a bit like paying your parents for something you broke and then just not telling them what it is, and then expecting them not to look around the house.
“it would be an extreme if not an extravagant application of the Fifth Amendment to say that it authorized a man to refuse to state the amount of his income because it had been made in crime. … He could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.” .... "It is urged, that, if a return were made, the defendant [Sullivan] would be entitled to deduct illegal expenses, such as bribery. This by no means follows, but it will be time enough to consider the question when a taxpayer has the temerity to raise it.”
United States v. Sullivan, 274 U.S. 259 (1927)
- That's what ended up getting Capone too: https://www.forbes.com/sites/kellyphillipserb/2018/10/17/al-capone-sentenced-to-prison-for-tax-evasion-on-this-day-in-1931/?sh=2a73f4f27c4c
- I love how the government gets to have it both ways. You gotta report income from illegal activities, but you can't deduct costs from illegal activities. I'm of the opinion that deductions shouldn't be a thing at all, but I'd at least like some consistency!
  
  Yeah there's a logical inconsistency for sure, but I see the practical necessity of it.

Dang.
"We're not the cops, we just want our cut."
-- IRS Probably

It's cool if you return it at the end of the year that you don't have to pay taxes on it. You could steal something, use it to make more money, and then return it. This avoids paying any kinda sales taxes when you took it. And since inventory is taxed you wouldn't have to pay on that.
Someone could exploit this. Make a fake company that steals from the real company, returns the property at the end of the year.
- My first job was at a place called Cybo Robots in Indianapolis. The R&D department there created something that iRobot turned into the Roomba, when they bought the company. The entire point of the company was to lose money as a tax write off. The owner owned several other profitable companies, and needed a money sink so that he could get out of paying taxes, so he created Cybo Robots.
  My point here is that not only could someone exploit this, they already are in multiple ways.
- Technically, if you intend to return it eventually, it's not theft.
  Theft, under the common law of England, as brought to the U.S., is the deprivation of personal property of another with the intention to permanently deprive them of it. If you don't have that intent, it's not theft. That's why we have "joyriding" and "grand theft auto" as separate things.
  
  Is there anything about the exact definition of permanent? I mean, otherwise I could just include the items in my will and refer to that.
  "All items that have been subject to lending with one sided consent shall be returned to its respective owners at the end of my life."
- Nice try, FBI!
  
  Would have gotten away with it to if it hadn't been for you meddling kids
- Sort of a Ponzi scheme before it comes crashing down.
- I wonder if this would work lol

Just be rich and pay nothing instead

me: I stole a bike.
owner: Plz, gov, help me get it back.
me: Here, my income taxes.
gov: Yup. We're all goood. Bye.
- owner: wtf gov
  gov: try another gov

Europeans: You guys have to file your own taxes?
- Yes, but it is different. I'm employed, so my employer pays taxes, social security, pension fund money, and health insurance into the proper channels, and I get an "after taxes" direct transfer (which is standard here for decades now).
  The tax rates the employer pays are based on complicated tables which are calculated on average annual incomes and no deductions. So they are usually higher than they would be in reality.
  At the beginning of the year, we get a paper from the employer stating how much taxes they have paid out of my pay over the year. Then we can take (you are not required to, but letting this slip would be stupid) tax forms and fill them out, or use a tax software (costs about €5 and contains all the legal tricks and up-to-date information). There you can claim all things that would reduce your tax load, e.g. Text benefits for education, for having a handicap, times on unemployment, change of pay rate, office supplies you need for business purposes, medical costs (which usually is not much, because we have working health insurance, but there are co-pays and things that are not covered, like something that is a big thing for us: a fixed rate per kilometer for trips to doctors and physiotherapeuts, which is a list of several pages and alone reduces our tax load by several hundred euro).
  You submit this as a paper form, or, more modern, online. We usually hear back from the tax guys a few weeks later, asking for invoices and receipts, send them in, and again a few weeks later, we get money back. As we can claim a lot of stuff (my wife is handicapped), we usually get a few thousand euro back - which is a good incentive to file taxes! But even as a normal person, it pays, as there is a form "work-related costs" where people can claim money for commuting and similar things.
  As a self-employed person, one has to submit taxes for the business, of course.
  
  What you’re describing is basically identical to what happens in the US, so not sure what is “different.”
- What do you mean? So do Europeans? In some countries you don't have to if all your income is your salary and have no extra expenses.
  
  In Belgium they also fill in the expenses automatically.
  The only thing you need to do is check if anything is missing, and just not do anything if everything is correct. Which it usually is.
- Check the tax office's website of the country you live in, you might be up for an unpleasant surprise. Pretty normal to have to file a tax report if you are a grown up. There are exceptions in a few countries if all your income is from salaried work and you don't have any deductions to claim but not the norm
  
  CRA (Canada) basically fills in your info for you, you just need to authorize your account in your tax software. Doable online too. If you run a business they obviously can't do this but if you're an employee they have all your info.
  
  From a UK point of view:
  That absolutely is the norm. All handled through PAYE.
  Any alterations are typically handled through next year's tax code. Normal people don't have to get involved in the process at all. You can prod them to get any refunds sooner (say you get a big bonus and the tax ends up going out of whack), but it works out over time to the point you don't need to.

They still miss the "declare here the wages you stole"
- But those are already taxed as ordinary income

If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.
Lesson learned. Steal on Jan 1st 00:01, return to owner on Dec 31st 23:59, rinse repeat.
- now if only you could learn about the financial year we would be cooking with ~~gas~~ something that doesn't cause cancer ...
  
  While the US government's fiscal year starts in October, and many employers have fiscal years not starting on Jan 1, individual taxes are generally calculated by the calendar year. Form 1040 defaults to that unless you write in otherwise.
- I feel like this is just borrowing with extra steps
  
  Involuntary borrowing. But also nothing stops you from stealing it again on 01-01 @ 00:01.

Yeah, they say this shit but hide the addendum forms like five layers deep in a FAQ link tree. And don't even get me started on the forms you need if you steal drugs. Like, holy shit. I hate to be a bureaucan't, but somethings gotta change

Yeah, they got Al Capone for tax evasion, and they’ll get you for confessing to a crime on official government documents.
- Line 8z is "all other types of income" it's not specifically "income from crimes."
  It's just a catch all for anything not covered in A through P. Like, gambling winnings or unreported cash tips. The IRS just wants their cut. They don't actually care where the money comes from. An insurance payout might go on that line.
  
  They're already getting their cut from sales tax after an insurance payout. That ain't income. Do I get to also declare a loss on anything lost, stolen, or depreciating in value?
  Edit: downvotes from people overpaying the IRS, or who've never had to make an insurance claim

What about legally questionable activities? You know, from things that aren't exactly crimes, but sure look like it? Asking for a friend
- That's a great question. We can help you with that, but first we'll need a few more details. 👀
- If they’re not illegal then you’ve got nothing to worry about how it looks, and you probably wouldn’t need to ask.
  So I’d be really sure about the legality part, it sounds like you may possibly be engaging in a little personal ambiguity regarding the facts.
- If you’re making money off of it Uncle Sam wants his cut.
- If you’re making money off of it Uncle Sam wants his cut.

https://en.m.wikipedia.org/wiki/Parallel_construction
TL;DR- if you do this you are foolish and you are going to get fucked, probably forcefully in prison.
- No shit.
- I can not find it. Maybe I am blind, but where in that article does it say the CRA reports criminal activity to the Department of Justice?
  
  This is a picture about the IRS, not the CRA. Also parallel construciton is a US law to fuck over its citizens, I'm not sure what the equivalent of Canada's version is. However it says that any info obtained by any regulatory body can be shared with law enforcement of any kind and they don't have to tell you that's how they obtained the information.

The feds are actually disturbingly fair about this. You can deduct your legal fees as a business expense.

So then if you get caught and these are taken away from you, I assume you can declare it as a loss and get an equivalent deduction the next year? I wonder if anyone's ever used this to their advantage to game their tax rates?
- "damn, I can't steal any more this year or I go up another tax bracket"
  
  Americans will never understand tax brackets.
  
  Or more accurately: “I need to steal at least $3k more in stuff so I can properly tax loss harvest on my criminal activities”
- From what I remember you actually can't claim deductions for illegal activity. I believe the post title is wrong.

So, if you declare that money it is already clean?
If I declare 100m of selling coke, and pay 60m in taxs, the remaining 40m are clean?
- No, paying income taxes isn't money laundering. Those two are totally unrelated.
  Also, money laundering doesn't make it not-a-crime to have dirty money, it just makes it harder to trace the crime. It is, in fact, a crime in itself.
- just means you're not committing two crimes, and as even the joker knows, you don't fuck with the IRS
  
  You can't plead insanity for tax evasion. So if they get him on that he doesn't go back to Arkham.

You need to take a sensible deduction.
- Here is an alternative Piped link(s):
  You need to take a sensible deduction.
  Piped is a privacy-respecting open-source alternative frontend to YouTube.
  I'm open-source; check me out at GitHub.

Oh sweet, so I can steal stuff Jan 1 and return it Dec 31 with no hit on my taxes. This changes everything.

Hobbies are tough to take deductions on. They want you to form an official business to take all the deductions. Report that income though, garage sales, Facebook market and the like as well.

117 comments