Q:

When does a bank report a deposit to the IRS?

A:

Banks are required to notify the IRS when someone deposits or withdraws more than $10,000 in cash in one transaction or in a series of transactions. Banks are not required to notify the IRS of personal checks in any amount.

Banks are also required to report suspicious activity including transactions that are unusually large for a specific individual. To be sure they are operating within the law, banks sometimes report transactions that are less than the $10,000 threshold but appear suspicious. Cash includes currency, bank drafts, traveler's checks and money orders.

These rules are part of the Bank Secrecy Act. The act mandates that any business, not just a bank, reports a transaction or several transactions that amount to more than $10,000. Transactions that must be reported when they meet the $10,000 threshold include rental or sale of merchandise or property, a loan repayment or cash exchanged for other cash or financial products such as bonds or money orders.

Banks and businesses are required to submit a form to the IRS within 15 days after the large transaction. In the case of several smaller transactions, the bank or business must report within 15 days after the total of the transactions is greater than $10,000. The business must alert the individual that the report has been made.


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