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Not Reporting Income From Side Job Can Lead to Tax Evasion Charges

Tax evasion charges can take many forms. Sometimes they involve reporting requirements on offshore accounts. In other cases, there may be questions about whether a taxpayer properly reported income.

It can be easy to underreport, especially if you are self-employed. The same challenge is present for those who take side jobs. In one recent tax evasion case, for example, a former Austin police officer was sentenced to a year in prison for failing to report income he earned doing private security work while he was still on the force.

U.S. District Judge Sam Sparks sentenced the 36-year-old former officer last month. Judge Sparks said the year of incarceration was intended, in part, to deter other people from evading taxes.

The amount of income at issue in the Austin case was fairly substantial. Judge Sparks said the officer did not report about $323,000 in income. This meant there was about $63,000 in unpaid federal taxes.

At his sentencing hearing, the former officer said he was under financial pressure because he was supporting a wife and five children. But he acknowledged that this was not an excuse for failing to report income from his second job

The officer's well-paying side job apparently involved providing security for the daughter of a Mexican businessman who was attending college in the United States.

A special agent for the IRS criminal investigation division said that the business in question was not thought to be related to drug trafficking.

Even if a side job is not so well-paying, however, it's important to be prepared to justify your decision regarding which to income to report - or not to report.

Source: "Former police officer gets one year for tax evasion," Austin American Statesman, Steven Kreytak, 6-18-12

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