Where to Report Cash on 1040

There mere fact that you earned cash doesn't mean that you don't have the legal obligation to pay taxes on your earnings.

Cash received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if less than $600.

Use Form 1040, Schedule C, Profit or Loss from Business, to report income and expenses. Expenses must be a reasonable amount to be deducted and shouldn’t be inflated. You will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 8 as Other Income.

Occasional income that is neither regular, frequent, continuous or intended to make a profit, is not considered self-employment income. This would also include sources of unearned income such as prizes and awards, payments for participating in medical research studies, legal punitive damages, etc.

If your cash income is not self-employment income, you do not need to use Schedule C to report business income. Instead, the cash income will go onto Form 1040 Line 8 as Other Income that is only subject to regular tax and not subject to self-employment taxes.