If a payment platform reports income to the IRS but you don't report it on your return, the mismatch triggers an audit letter. You also need to report expenses alongside income, even if they exceed what you earned, so the IRS can see your net loss and increase your refund.
The IRS doesn't care how small the income is if they see it because there could be more. It could be the tip of the iceberg in there, Biden said. So if there's some income you're not reporting, it could open up a whole can of worms. So if a third party reports income that you earn to the irs, which they're required to do, and your return shows zero, that mismatch is obvious and is often enough to trigger an IRS letter, if not an audit. Now you may say, well, I've got expenses that wipe out that income. Well, if you don't report the income and report the expenses, the IRS doesn't know that. They just know that you had income. And what's interesting, many, many times clients that I've worked with in the past, they had expenses that exceeded the income. They could have gotten a write off, a loss that they could have used against their day job. W2, they could have actually got a bigger refund from the IRS by reporting their activity. So what a lot of Americans do is they get focused on the gross income, how much they're actually making or being reported to the irs rather than thinking about what's the net profit, it could be in your favor.
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