Q: My bank told me that it reports any cash deposits above $10,000 to the IRS. But that money doesn't represent taxable income from a job or an investment; it's nobody's business but my own. Does the bank have to report that? J.H., Plymouth, Mass.
A: Yes. If a bank receives $10,000 or more in a single cash transaction (or a series of related transactions), it is required to report the transaction to the IRS. Also, the bank must provide a statement to the payer. This rule is designed to discourage money-laundering activities and doesn't have any bearing on whether the income is taxable or not. Tip: Those cash-reporting rules aren't limited to financial institutions; they apply to businesses from all walks of life. If you must report cash transactions of $10,000 or above, file IRS Form 8300, Report of Cash Payment Over $10,000 Received in a Trade or Business, available at www.irs.gov/pub/irs-pdf/f8300.pdf. You must also provide the customer with a copy of the completed form.
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