When and How to File Cash Income

Was 2010 a good year for you? For some it was a financially difficult time – hours were cut while monthly bills still came in. Fortunately some people saw this as an opportunity to earn some extra cash on the side doing jobs like dog walking or getting tips as a restaurant server on the weekends. The extra money was helpful and you were allowed to stay on top of your finances.

Now it’s tax season and you’re wondering how this will impact your tax return. Do you include your cash income or do you have to have a minimum before you have to include it on your 1040? If you do need to file it, how do you do it?

Do I Include Cash Income When Filing Taxes?

With the IRS the only see two types of income taxable and non-taxable. According to the IRS, here’s how they view income, including cash:

Taxpayers must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands.

Generally, the IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption.

Check out the definitive source: Publication 525, Taxable and Nontaxable Income.

What is nontaxable income? Generally they include:

  • Public Assistance
  • Child Support
  • Federal Tax Refund
  • Workers’ Compensation

As you see, tips and cash income are not included. While some people believe that there is a $600 minimum to include income when filing taxes, there is no minimum in the IRS’ eyes.

Where Do I Include Cash Income in My 1040?

If you received tips at your job, it should have been reported to your employer and included in your W-2. The amount would be included on line 7 of your 1040. If your employer made a mistake, they have to give you a W-2c (corrected W-2) for you to file your taxes properly.

If you received cash for dog walking or babysitting for example as part of self employment, then you should include the amount on your Schedule C.

Thoughts on Cash Income

Don’t be worried when it comes to filing taxes. Getting more income, including cash is a great thing. Keep it that way by being honest when filing your taxes.

Elle Martinez

Elle helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second.

Comments (7) Leave your comment

  1. What if I’ve already filled @ got my tax return & didn’t know at the time I could have added my cash hours because my boss asked me not to?

  2. I too would like to know the answer to this question. I have already filed my taxes. I filed schedule C and just put in what I made. I hope that is good enough for a the IRS, I mean I was honest with my earnings but who knows what triggers an audit? Only the IRS Thats who… hopefully my return is accepted and a refund is issued.

  3. I worked as a cook in a small town BBQ restaurant, never filled out w2 or anything else, how do I claim this cash I was paid?

  4. unfortunately after 3 years from when the tax return was due, you cannot recover any of the money you should have gotten.

  5. I was recieving tanf in az. for part of the year2012. then worked odd jobs for cash no W2. I have two dependents and recieve no child support how do i file?

  6. I was late in filing my taxes for several years but finally I filed all years and each year I was do a refund. Irs is telling me that I can’t receive refunds because of late filing. What can I do about it?

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