2. Failing to File Your Income Tax ReturnÂ
Failing to file your income from Social Security benefits, IRA distributions, dividends, pensions, wages, and other sources will most likely result in unwelcome attention from the IRS.
All 1099s and W-2s you get are forwarded to the IRS. This means that the IRS gets transcripts or copies of the 1099-R (reporting payments from retirement plans such as pensions, profit-sharing plans, 401(k)s, and IRAs), the 1099-SSA (listing Social Security benefits), and 1099-K (reporting payments made via PayPal, Airbnb, etc.).
The IRS’s computers are quite great at checking if the numbers on the forms are matching your income tax return. A mismatch can definitely turn into a red flag causing the IRS computers to issue a bill.
This being said, you should report all income. No matter if you give guitar lessons, drive for Uber, or tutor young children, if you got paid, you’ll have to report the money you receive.
