Hey Simplifiers,

I was studying for my CFP this weekend and stumbled on something wild in the tax planning section:

Illegal income is 100% taxable.

Drug money. Stolen goods. Bribes. Scams. All of it.

The IRS expects you to report it and pay taxes on it.

And here's the kicker: Most criminals don't go to jail for the actual crime. They go to jail for not paying taxes on it.

Al Capone didn't get locked up for murder or bootlegging.

He got locked up for tax evasion.

Let that sink in.

Here's how the tax code sees it:

If you rob a bank and walk away with $100,000, that's taxable income.

If you spend $20,000 on guns, getaway cars, and tools to pull off the heist? You can't deduct those expenses.

Why?

Because the IRS says expenses from illegal activities aren't allowed as business deductions.

So they want the revenue from your crime. They just won't let you write off the costs.

Wild.

This isn't just a fun fact for true crime podcasts.

It's a reminder of how the tax system actually works:

The IRS doesn't care about morality. It cares about revenue.

Income is income. Legal or not.

And the rules are designed to make sure the government gets paid — even if you're doing something completely illegal.

Which makes you wonder:

If they're this strict about taxing criminals, why are there so many loopholes for billionaires?

You don't have to be Al Capone to learn something here.

The lesson is this: The tax code isn't about fairness. It's about compliance.

They'll tax illegal income but won't let you deduct the expenses.

They'll give billionaires credits for private jets but question your home office deduction.

The system is consistent in one way: It's designed to extract as much as possible from people who don't know the rules.

So learn the rules.

File your taxes.

And if you're running a legitimate business, claim every single deduction you're legally entitled to.

Because if the IRS expects criminals to pay taxes, you better believe they expect you to pay yours.

Look up the standard deduction for 2026.

Single: $15,000
Married filing jointly: $30,000

That's how much you can earn without paying federal income tax.

If you're freelancing, have a side hustle, or running a business, knowing this number helps you plan.

And if you're still confused about what you can and can't deduct, don't guess.

Use the free resources at irs.gov or talk to a CPA.

The tax code is complicated on purpose. But understanding even the basics puts you ahead of most people.

Including, apparently, most criminals.

With care,
C
Founder of The Simple Adult 🩶

P.S. — If this made you realize you've been avoiding filing your taxes because you're scared, file anyway. Even if you owe. Even if you're late. The IRS will work with you if you communicate. Ignoring them makes it worse.

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