Forgetting to report income is one of the most common tax filing mistakes and one of the most likely to be detected. This often happens when taxpayers overlook side work, freelance projects, online sales, investment earnings, or income received through payment apps.
All income is taxable, regardless of whether you received a tax form. In many cases, the person or company that paid you reports the income directly to the IRS or New York State. When the income reported by third parties does not match what appears on your return, the discrepancy is flagged automatically.
When missing income is identified, tax authorities typically send notices explaining the discrepancy and proposing additional tax due. If the issue is ignored, penalties and interest continue to accrue. Over time, unresolved discrepancies can lead to collection actions.
The good news is that most cases of unreported income can be resolved by filing an amended tax return. Amending allows you to correct the error, report the missing income, and bring the return into compliance. Correcting mistakes voluntarily often results in lower penalties than waiting for enforcement action.
Preventing missing income begins with thorough record review. Reviewing bank statements, payment app summaries, and income logs before filing helps ensure all income sources are included.