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.
The point here is to make it explicitly clear that if you’re making money off illegal activity, you can and will be charged with tax evasion when caught. The government will still take action if you tell on yourself, even for tax purposes 👍
This is true see IRS publication 525.
Illegal activities.
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.
Bribes are also considered taxable income.
The point here is to make it explicitly clear that if you’re making money off illegal activity, you can and will be charged with tax evasion when caught. The government will still take action if you tell on yourself, even for tax purposes 👍