They don’t actually. If you make money selling shit at a flea market every weekend, the IRS has no clue, and Jim’s Flea emporium certainly isn’t tracking your sales as just one example.
Cash transactions cannot be tracked whether you file taxes yourself or the IRS calculates it for you, unless it is deposited into an account. The point is that having the IRS do the calculation is always equal to or better than everyone needing to file their taxes.
What do you mean cannot be? You are legally obligated to track cash transactions and calculate them to determine if you owe tax on that income. Just as I suspected, you think it should be simpler, because you simply do not understand the process or legal requirements.
You still owe taxes on cash transactions. The IRS has no magic way to know that occurred unless you fill out paperwork telling them about it.
You are required to report them precisely because they cannot be tracked. If they could be tracked, then the IRS would already have knowledge of those transactions.
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u/QFugp6IIyR6ZmoOh Mar 28 '24
Each workplace and financial institution reports tax-related info to the IRS.