HELP!! How to report unreported under the table income to the IRS?
So I worked a construction gig in 2022 that paid cash and made roughly $26,000 total. The boss never gave me any W-2 forms, and I stupidly thought that meant I didn't need to report it on my taxes. Well, after talking with my cousin who's in accounting, I just found out I absolutely should have paid tax on that under the table income. I'm freaking out a bit, but I want to fix this before the IRS comes after me. I already filed my 2022 return without including this income, and now I need to figure out how to amend it to include this unreported income. What's the best way to go about filing an amended tax return to include this unreported income? Will I get hit with huge penalties? Anyone been through something similar?
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Lucas Notre-Dame
You're doing the right thing by addressing this now rather than waiting for the IRS to find out. To amend your 2022 return, you'll need to file Form 1040-X (Amended Tax Return) and include a Schedule C since this was self-employment income. Since you didn't receive a W-2, you were technically working as an independent contractor or self-employed, which means you'll owe both income tax and self-employment tax (about 15.3% for Social Security and Medicare). The good news is that you can deduct any legitimate business expenses you had related to this work - tools, supplies, mileage, etc. As for penalties, you'll likely face some, but they'll be much less if you voluntarily correct this before the IRS discovers it. Typically, you'd face a failure-to-file penalty (if applicable), failure-to-pay penalty, and interest on the unpaid amount. However, the IRS has programs for first-time penalty abatement that might help in your situation.
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Aria Park
•If I'm in a similar situation but it was 2021 income, is it too late to file an amended return? Also, how do I figure out exactly how much I made if I was paid in cash and didn't keep great records?
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Lucas Notre-Dame
•It's not too late for 2021 income. You generally have three years from the original filing deadline to amend a return, so for 2021 taxes, you have until April 2025. For calculating your income without good records, you'll need to reconstruct as best you can. Check your bank deposits, look for cash withdrawal patterns that might indicate your spending habits, or try to calculate based on how many hours/days you worked and your pay rate. Even a good faith estimate is better than nothing. The key is documenting how you arrived at your figure in case you're questioned later.
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Noah Ali
I had a similar issue last year and found taxr.ai https://taxr.ai super helpful for figuring out how to handle unreported income. I was freaking out about potential penalties but their system helped me understand what forms I needed and even gave me estimates on what I might owe. The coolest part was it analyzed my situation and showed me some deductions I could take as a self-employed person that ended up saving me almost $3000. Their document analyzer also helped me organize the receipts I had kept in a shoebox (lol) as proof of my business expenses.
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Chloe Boulanger
•Did you need to provide them with bank statements? I'm worried because I was paid in cash and deposited irregularly, so my bank statements won't match up perfectly with my actual income.
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James Martinez
•I've heard about these AI tax tools but aren't they just glorified calculators? How did it actually help with something complicated like unreported income? Did it actually give you specific advice for your situation?
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Noah Ali
•You don't need to provide bank statements if you don't want to. The system mainly helps you calculate what you owe based on the income you report. I uploaded some receipts for expenses, but for the income I just entered what I knew I had earned. It's more about helping you properly document everything moving forward. The AI is definitely more than a calculator. It actually analyzed my specific situation with unreported income and walked me through exactly which forms I needed and why. It gave me personalized recommendations about which deductions applied to my construction work and explained how to document everything properly to avoid future issues. It was like having a tax pro looking over my shoulder but at a fraction of what I'd pay an accountant.
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James Martinez
Just wanted to follow up - I tried taxr.ai after being skeptical about it and wow, it actually delivered! It guided me through the whole process of figuring out my unreported income from my side gig last year. The penalty calculator feature showed me that filing voluntarily would save me thousands compared to waiting for the IRS to find the unreported income. It even helped me identify over $4,000 in business deductions I didn't know I qualified for! Definitely turned a stressful situation into something manageable.
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Olivia Harris
If you're really worried about the IRS coming after you (especially with unreported income), you might want to try getting ahead of it by talking to them directly. I was in a similar situation and spent WEEKS trying to get through to the IRS phone line with no luck. Then I found this service called Claimyr https://claimyr.com that got me through to an actual IRS agent in under 20 minutes. They have this cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c I was able to discuss my "theoretical situation" with the agent without giving my personal details, and got solid advice on how to handle my amended return. The agent was surprisingly helpful and even explained how I could request penalty abatement. Totally worth it for the peace of mind alone.
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Alexander Zeus
•How does this even work? The IRS phone lines are impossible to get through. Is this some kind of scam where they charge you a ton of money and then just put you on hold anyway?
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Alicia Stern
•This sounds too good to be true. I spent 4 hours on hold with the IRS last month and never got through. If this actually works, wouldn't everyone be using it? And isn't it risky to basically admit to an IRS agent that you didn't report income?
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Olivia Harris
•It uses a callback system that monitors the IRS phone lines and secures your spot in line, then calls you when it's your turn. No magic, just smart tech that works with the IRS's existing phone system. It saves you from having to sit on hold yourself. When talking to the IRS, I didn't immediately admit wrongdoing - I phrased it as a "hypothetical situation" or "asking for a friend" type question first to understand the process. The agent actually explained that they appreciate when people come forward voluntarily, and that the penalties are much lower when you self-report versus them discovering it in an audit. They walked me through exactly what forms I needed and the best way to explain my situation.
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Alicia Stern
Update on my situation - I was super skeptical about Claimyr but got desperate after my third attempt waiting on hold with the IRS for hours. It actually worked exactly as advertised. Got connected to an IRS agent in about 15 minutes! The agent explained that under their Voluntary Disclosure program, I could potentially get some penalties reduced since I was coming forward before being audited. She walked me through exactly how to file the 1040-X and what supporting documentation I should include with my amended return. Honesty feels so much better than the anxiety I was living with!
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Gabriel Graham
Don't forget that with under the table income, you'll be considered self-employed, so you can deduct business expenses! Keep in mind things like: - Mileage driving to job sites - Tools and equipment - Work clothes/boots if specific to your job - Cell phone (percentage used for work) - Home office if you have dedicated space This could significantly reduce what you owe. I was in a similar situation with about $18k unreported in 2020, and after deductions my tax bill was much lower than expected.
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Drake
•Can you really claim those deductions without receipts though? I worked construction under the table last year and literally have zero documentation for any of my expenses.
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Gabriel Graham
•You can estimate reasonable expenses even without perfect documentation, but you should have some supporting evidence if possible. For example, with mileage, start a log now documenting your typical work travel patterns, then use that to reasonably estimate your past travel. For tools, take photos of what you own and research purchase prices online. The IRS does allow for reasonable reconstruction of records that were lost or never kept. Just be honest and realistic - don't claim $10,000 in tool expenses for a $26,000 job. And definitely start keeping better records going forward! Even a simple notes app on your phone where you take pictures of receipts is better than nothing.
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Sarah Jones
Has anyone used TurboTax to file an amended return for unreported income? Is it straightforward or should I just go to a CPA? I'm in a similar situation but only made about $9k under the table.
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Sebastian Scott
•I used TurboTax to amend a return with unreported income last year. It was pretty straightforward for the basics but I found it didn't give great guidance on what documentation I should keep or how to explain the situation in the amendment. For only $9k it might be fine, but if you can afford a CPA consultation, even just a one-hour session, they might catch deductions you'd miss and give you better peace of mind.
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