Great question. Cash jobs, like helping at a pumpkin patch or running a seasonal delivery route, can seem informal, but the IRS still considers this taxable income. Whether you are paid in cash, by check, or electronically, you are required to report the earnings on your tax return.
How Cash Income is Reported
The way you report the income depends on how you were hired:
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Employee Work – If you are an employee, you should receive a W-2 at year-end. This form reports your wages along with any federal and state withholdings.
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Self-Employment Work – If you are working as an independent contractor, you should receive a 1099-NEC if you earn more than $600 or the year. Keep in mind, this form won’t have withholdings.
What About Deductions?
If you’re self-employed, you may be able to deduct ordinary and necessary business expenses related to your work. These are costs that are both common in your line of work and helpful to completing your jobs. Keeping detailed records of these expenses is essential.
Why Reporting Matters
Unreported cash income can lead to penalties and interest if the IRS discovers it later. On the other hand, reporting your earnings correctly allows you to take advantage of deductions, build an accurate earnings history, and avoid surprises.
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