IfIRepliedYouAreDumb t1_j6gwcnl wrote on January 30, 2023 at 5:56 AM

Reply to comment by GenXCub in ELI5: Why does the IRS want your illegal income declared on tax returns? by xCreamPye69

Money laundering is NOT what they are talking about though. There is a section on the 1040 where they ask you to declare income from illegal activities.

Money that has been laundered would be filed under the section pertaining to however you laundered it.

OP is asking why they have that line there

markroth69 t1_j6h889a wrote on January 30, 2023 at 8:24 AM

Money from illegal activities: $0

Money from my, uh, consulting firm called Definitely Not an Extortion Racket: $1,000,000

IfIRepliedYouAreDumb t1_j6h8s3y wrote on January 30, 2023 at 8:32 AM

You’re still not getting it. He’s not asking HOW to launder money, he’s asking WHY that line is there. And it’s there as a way to tax federally illegal revenues.

Things like casinos and brothels have historically fallen under this category. I’m sure marijuana could too, if you want to be able to receive digital payments (which is why a lot of dispensaries are cash only).

Also that’s not how money laundering works, if you’re receiving payments like that the cash would have to be laundered before then.