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You don’t have to say where it came from, you just pay the taxes, I shit you not there is a place for it
...wait...really?! You can just report things as unspecified income? I didn't know that.
Still though, drug dealers aren't exactly poor unless they're bottom rung. I can't speak for all gangs (though they do kinda all work this way) but the Bloods for instance get great prices on drugs in my area between members and sell to "civilians" at a huge markup, like a ball of coke for them is around $80 but they sell it for $150. I've sold drugs myself in the past, I actually currently have friends that bang though I never did, none of them are hurting for cash and I wasn't back then either (but what I do now involves less prison, so it's risk/reward.) Guess I didn't have to tax evade, though I did lol. TIL!
It's a catch-all category on your 1040 for 'income from illegal sources'. I do know that you can't take deductions for business expenses related to illegally gained income though, so you don't get any kind of write-offs or deductions. (E.g., you can't depreciate any of the durable equipment that you need to buy to conduct your illegal business, you can't claim travel expenses, etc.) Plus, I think that it gets counted as 'self-employed' income, which means that you have to pay the full share of social security and medicare/medicaid that would normally be covered by an employer.
It's pretty simple to do, honestly. But I don't know if that kind of declaration can be turned over to another three-letter agency to start a criminal investigation into you, so ???
See that's what I meant by "causing other problems," the whole "investigation by other agencies" thing that, yes, they totally do.