Legal Question in Business Law in Indiana

Re: tax information

Babysitting income must be reported on state and federal tax returns, the same as any other earned income. Failing to report income is a state and federal criminal offense. However, the IRS usually handles the failure to report as a civil matter, meaning they will assess monetary penalties, because they prefer to have the taxpayer's money rather than his carcass. A taxpayer who voluntarily reports prior year income will be greeted with the injunction to go and sin no more. There are many deductions that apply to a business, so the income won't be nearly as much as the total amount of babysitting fees.