How does the IRS know my income?

The Internal Revenue Service (IRS) is the government agency responsible for collecting taxes in the United States. Each year, the IRS requires taxpayers to report their income. The IRS then uses this information to determine the amount of taxes that are due. One of the primary ways that the IRS knows your income is through your employer. When you are hired, your employer must supply the IRS with your Social Security number, name, and other personal information. Your employer is then obligated to report your taxable wages and other payments made to you during the year to the IRS. This information is reported using a W-2 form, which is sent to both you and the IRS. The IRS may also receive information about your income from other sources, such as banks and investment companies. These entities are required to report the interest and other earnings you received from them during the year. Additionally, if you received income from real estate transactions, or from gambling, the IRS will likely receive this information. Finally, if you are self-employed, the IRS requires you to file an income tax return to report your income and payments. By submitting this form to the IRS, you are also reporting your income. In short, the IRS knows your income by receiving reports from your employer, banks, investment companies, and other sources, as well as by you filing an income tax return. The information you supply is used by the IRS to calculate the taxes you owe.

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