The IRS is cracking down on a type of income earned by millions of people. Here's how to prevent a letter from Uncle Sam

Group 1 - The IRS is intensifying its scrutiny on side income, with approximately 27% of American workers engaged in side hustles by 2025, although the median income from these gigs is only $200 per month [1] - The modernization of the IRS, funded by the Inflation Reduction Act of 2022, has enabled the agency to utilize advanced data analytics and AI tools for tracking income [2] - The IRS defines "gig work" broadly, encompassing earnings from ride-sharing, property rentals, online sales, errands, and freelance services [3] Group 2 - Any side income exceeding $400 annually must be reported to the IRS, which has various methods to track unreported income [3][4] - Third-party vendors and corporations are required to report payments made for gig work, with companies like Airbnb and Uber confirming this obligation [4] - Banking institutions report direct payments to accounts, while peer-to-peer payment processors like Venmo and PayPal must report accounts with over 200 transactions and $20,000 in net transaction value within a tax year [5]