33 percent of young people with side hustles make one dangerous mistake

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A July survey from found that 69.8 million of the Americans making good money working side hustles aren't declaring that additional income on their taxes.

That's a fourth of all the Americans participating in the gig economy.

While millennials are the savviest and most enterprising of all the generations, bringing in more than the others with an average of $3,677 a year, they're also the worst at reporting that income. The report found that 33 percent don't declare it on their taxes.

Meanwhile, 26 percent of Generation Xers and 17 percent of baby boomers aren't being fully honest, either.

The IRS says tax evasion costs the government $458 billion a year. Of that total, according to the report, $214.6 billion is estimated to be from undeclared side-hustle income.

The short-term, flexible jobs of the gig economy make this possible. One of the most common is babysitting, for example. Sitters are usually paid in cash.

By law, once they make above a certain amount, earners are supposed to report, and pay taxes on, what they make in these sorts of positions. "The money you earn on side gigs are considered 'self-employment,' the report notes, "and you can file it with your personal income tax return."

The risk of failing to do so is considerable. As CNBC Make It reports, if you don't file your taxes, the IRS can charge you 5 percent of your unpaid taxes for each month your tax return is late. If you file your taxes but don't pay them, the penalty is 0.5 percent of what you owe for each month you don't pay, up to 25 percent.

Continue to ignore your taxes and the IRS could make you forfeit your refund, revoke your passport, seize your property or file charges against you.

As LuSundra Everett, an IRS Enrolled Agent, tells, "If the IRS determines that you had a filing requirement, and you didn't file, you can actually go to prison."

And you can get caught, Everett says: "The IRS has a 'Whistleblower' program, where the confidential informant receives a percentage of whatever the IRS collects. An angry boyfriend or girlfriend, or jealous coworker, will do the trick."

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