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My friend was looking into the limits of deposits before the IRS starts looking and auditing you. She just bought a motorcycle for ~5000 so she's dealing with reimbursing her brother for it.

I've also run into curiosities liek this. My parents have paid for me since I was born, and I recently got a job so I'm trying to help out by reimbursing them for stuff. Can I just send them bank transfers or write them checks without Unckie sam asking what I'm paying them for? I'd really be reimbursing them for a whole series of things that I dont want to have to itemize....like cell phone bills, food, educational expenses, car insurance, etc. etc.

Thanks,
Glen

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If I'm not mistaken, it raises a red flag when $10,000 is deposited or withdrawn.

Small fish. I would not worry. As longa as you have the income, it does not matter waht you are paying for.

IRS does not look at you for that. Only the bank will report you under the Patriot Act (I believe).

ojai00 said: [Q]If I'm not mistaken, it raises a red flag when $10,000 is deposited or withdrawn.

For 10K and above, the bank wants you to sign an IRS form.

Banks have to report any deposit in excess of $10,000. They are also supposed to report any attempts to get around that, so if you deposited $8000 one day and $2500 then next. Certain types of business can get exemption from this.
They are also supposed to report anything deemed suspicious. So if you have had a bank account for 2 years and never had a balance of over $1000, and suddenly in one month you have had 8 deposits ranging from $4000 to $8000, that should be reported.
The important word is 'should'. Much of this falls on the shoulders of the tellers, who are often not paid or trained enough to understand what could be signs of genuine money laundering. However they can still potentially go to jail if they miss the signs (willful blindness)...

I've never ever been asked to sign a form for withdrawals or deposits above $10K. I believe the IRS audits you for suspicious tax activity or errors on your federal tax returns, not for how much you take in and out of your bank accounts.

However, if you DO get audited and you have suspicious large transfers or withdrawals, you definitely better be ale to substantiate them.

Man, how many times has this been discussed before. It's $10K in CASH people.

And truthfully, no one really cares. It takes quite a bit to generate interest.

And besides, if you're not doing anything illegal, why would you even care if there was a suspicious activity report generated?

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Edit: And, no, there isn't a form that you need to sign. Can you imagine the following:

You: Hi, I'd like to deposit $10K in recently laundered, non-sequential, unmarked bills.
Them: Oh, hey, sure, no problem. Just fill out this Suspicious Activity Report form and sign there for me...
You: Waitaminute. Make that $5K...I only have $5K.
Them: Sure...no problem. You have a great day.

I deposited over 10K in cash once and they asked me to fill out one of forms (actually I think they were suppose to fill it out). No audit or IRS contact, not that I had anything to hide. Bigger fish to fry I suppose.

Anyway as mbaker4096 says, its cash that you need to worry about.

Few years back I was doing something rather profitable where I often had a dozen different electronic transfers going on a week, many of which were in the thousands of dollars range and most with offshore entities. This was mostly post-9/11 and although I never did get audited or questioned, it was something I was very concerned about. In the end I concluded that as long as I kept accurate records on the sources of each and every deposit that I could withstand an IRS audit.
When it comes down to it the most they can do with a messy bank statement is try to claim all of your deposits are other sources of income you haven't reported (and demand you prove otherwise). As long as you can substantiate the source of each and every deposit the most they should be able to do is waste your time. Of course if Homeland Security decides to freeze a bank account or perhaps your JC Penney card that's a whole different story!

It used to be that the limit was $10,000 in CASH (deposit or withdrawl). If that happened, then the bank legally had to ask you to fill out one of the official forms.

I was reading through the money laundering laws recently and it looks like things have changed. These days a bank teller can ask you fill out one of the official forms for a $3000 CASH deposit or withdrawl -if- they think the transaction looks suspicious. It's up to the teller.

Note: I had to deposit over $3000 in CASH from a used car sale about two years ago. I took the Bill of Sale with me, in case there were any questions. No problem with the deposit.

I deposit $10,000+ or more 4-5 times a year and I have never signed any forms. I have withdrawed $20,000+ 2-3 times a year and I have never signed anything. But none of these transactions were cash.

I deposit $10,000+ or more 4-5 times a year and I have never signed any forms. I have withdrawed $20,000+ 2-3 times a year and I have never signed anything. But none of these transactions were cash.


Hey, new here, but actually work for a bank, and, am a teller.

The rule is, anything over $10,000 in cash, either a deposit or withdrawal gets reported. The form is a called a CTR, if the bank never asked you to fill it out is because it is either electronic or they have all the info in your account to fill it out themselves (which they're supposed to do already on your behalf). They just look up the info in your account, fill it out and fax it to their back office who then reports it. The form itself isn't a problem, neither does it mean you will get audited, its merely a disclosure, if there's a bunch of these in a year and you're not a business, then there may be some questions, however like I said, they can trace the money from your info, your job/business, the account activity so it all gets done w/o the person even knowing.

The other way to run into this is if you're buying a cashier check or a bunch of money orders for over $3000, the CTR gets triggered and again, if its electronic, you never even see it, it pulls all info from your account and fills it in, no paperwork.

One misconseption most people have is that it triggers at $10,000 and $3000, however this isn't true, it triggers at $10,000.01 and $3000.01 so stop moving money in chunks of $9900, because that just SCREAMS that you're doing something shady.

Thanks for the informative post, lv316 and welcome to the site!

lv316 said: [Q]it triggers at $10,000.01 and $3000.01 so stop moving money in chunks of $9900, because that just SCREAMS that you're doing something shady.

In fact, structuring transactions to to avoid these reporting requiements is illegal. Banks will report suspicious activity if they feel you are trying to avoid these requirements (frequent deposits of 9900, for example). It is also a crime to disclose to you when these reports (SAR) are filed.

Yet another reason to forget about these things unless you are a drug dealer depositing cash.

I once found bank teller training manual someone left on a train and learned more than necessary about this stuff <img src="i/expressions/face-icon-small-smile.gif" border=0> Wikipedia has all the details..



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