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.

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

…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.

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

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)

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.

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

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.

Nice try, FBI!

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 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.

• owner: wtf gov
• gov: try another gov

But those are already taxed as ordinary income

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.

"damn, I can't steal any more this year or I go up another tax bracket"

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