Do you need to pay taxes if you earn income in cash?

The IRS counts cash payments as part of your self-employment income, including any profits from prizes and winnings. That means you're still expected to report it and pay taxes for it, just like any other taxable income. You may even have to pay taxes on profits from Gold in my IRA investments. Your earnings end up included in your taxable income, which is used to calculate the taxes you owe. However, before you declare your prize and gambling income, you should know what is considered income and what is not.

The rules for income taxes are the same whether the prize is issued in the form of a single payment or in parts over time. Whether you work as a waiter in a restaurant, work in construction, or work as a summer camp consultant, you should report that cash income on your tax return just as you would if you were paid by check or direct deposit.