Actually yes. Or well sort of. I believe some tax forms even have boxes for illegal income. This is because there is an odd interaction between two very important laws; you must report all income truthfully for tax purposes and you cannot be compelled to incriminate yourself. Tax law cannot overwrite the 5th amendment. This means they have a choice; either they can prosecute anyone they see as having an illegal income but make it so people writing nothing but “I plead the 5th” on all their tax paperwork is perfectly valid. Or they can choose not to prosecute reported criminal income and retain the ability to go after people who refuse to do their taxes. The only way the tax system can work is if reporting your own illegal income doesn’t legally incriminate you.

The things you write on your taxes cannot be used against you in a court of law unless you are lying in some way. So it is legally safe. Practically perhaps not. Both the police and many of the security agencies love using something known as ‘parallel construction’. It’s where they get some information they shouldn’t have access to or shouldn’t be using and build an investigation that explains how they got that information legitimately so they can use it in court.