How does the IRS know my income?

The IRS knows your income through the information you submit on your tax return every year. This includes your wages, investments, pensions, and other forms of income. Your employer is also required by law to report your wages to the IRS using Form W-2 or Form 1099. Other sources of income, such as interest income and unemployment income, must also be reported to the IRS. Additionally, if you have any deductions, such as charitable donations, you must provide documentation to the IRS to show that they are valid. All of this information is used by the IRS to calculate your total income. In addition to income information, the IRS also collects information from various financial institutions and other third-party sources to verify the accuracy of data reported on your return. In California, the Franchise Tax Board is responsible for collecting state taxes. The FTB may compare your state return with federal returns to make sure all the information is correct.

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How does the IRS know my income?

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