Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Being extremely old-fashioned (and paranoid of banks and any investment vehicles), my parents have been squirreling away cash for the better part of 30+ years. Before you start harping on how foolish and naive they have been and how they've been losing value on that money, trust me, I have already been down that road with them before to no avail. Anyway, that's not what this post is about. The reason for this posting is that my wife and I are considering buying a house possibly in the next 10-12 months. As such, my parents have indicated that they would be interested in footing 20% of the purchase price (in additions to whatever sum we would put down - probably 10-15% on our part for a total of 30-35%) to avoid PMI, etc.
The central issue here is that the 20% from my parents would be least $100K (if not slightly more). The problem is that sum from them will be $100K+ in cash. Obviously, we're not going to be able to fund the home purchase with cash (it would need to be in the form of an electronic payment/check). Therefore, the question is, how do we put that $100K+ into our bank account without incurring suspicions of illegal activities or special notices from the IRS, fraud, etc. on both of us and our accounts (i.e. mine and my parents)? Should my parents just start putting in smaller cash deposits into my account now on a regular basis? If so, how much should these deposits be?
If you have trusted friends, relatives, etc several gifts can be made from your parents to you via those friends and relatives as long as each gift amount is under the IRS limit of (I think) $13000. So, to absorb $100K that is $13K from your dad to you, $13K from your dad to your wife, then your mom to you, your mom to your wife so there's $52K. Then $13K from your dad to uncle Bob then uncle Bob gifts that to you, dad to UB to your wife.....eventually your parents can gift as much as they want in one year to you and your wife as long as they mechanize it so that no one transaction is over the IRS limit of $13K.
If it was me I would put all the money in bags with the money symbol on them walk into a bank wearing the outfit the monopoly board game guy wears, and place all the bags of money on the counter saying I would like to make a deposit, sir or madam
If you make a cash deposit of over $10,000 at any financial institution they are required to complete a Currency Transaction Report which goes to the IRS.This form asks a number of questions, including your occupation.
If you make a cash transaction of more than $3,000, a financial institution is required to log said transaction. If there are multiple smaller transactions that accumulate to $10,000, this also sets off alarms and a Currency Transaction Report is required. (Computer systems track this.)
Additionally, a financial institution can require a Currency Transaction Report if there is anything that is considered suspicious behavior.
What about setting up a foreign bank account (e.g. Cayman Islands, Swiss) and depositing the money there? Though you would have to do a foreign exchange with fees when you buy the U.S. house... Not sure what the reporting regulations are now.... It may set up a bunch of red flags.. Does anyone know how this works?
Being extremely old-fashioned (and paranoid of banks and any investment vehicles), my parents have been squirreling away cash for the better part of 30+ years. Before you start harping on how foolish and naive they have been and how they've been losing value on that money, trust me, I have already been down that road with them before to no avail. Anyway, that's not what this post is about. The reason for this posting is that my wife and I are considering buying a house possibly in the next 10-12 months. As such, my parents have indicated that they would be interested in footing 20% of the purchase price (in additions to whatever sum we would put down - probably 10-15% on our part for a total of 30-35%) to avoid PMI, etc.
The central issue here is that the 20% from my parents would be least $100K (if not slightly more). The problem is that sum from them will be $100K+ in cash. Obviously, we're not going to be able to fund the home purchase with cash (it would need to be in the form of an electronic payment/check). Therefore, the question is, how do we put that $100K+ into our bank account without incurring suspicions of illegal activities or special notices from the IRS, fraud, etc. on both of us and our accounts (i.e. mine and my parents)? Should my parents just start putting in smaller cash deposits into my account now on a regular basis? If so, how much should these deposits be?
Well -- when I was a young teller, I had this little old lady who came in to cash her Social Security check, and she'd take it in 100's and 50's.
After a just a few months me ME witnessing this -- she was very old -- she died and her son came in with a large garbage bag.
Turns out, when she died, he went to toss out her old spring mattress and the thing fell apart... and intertwined in the springs was YEARS of her Social Security money... and I had the thrill of counting old gross money that wouldn't lay flat....
It totaled to around 60K, and my supervisor helped me because I just flipped out at that much money. We had to fill out a IRS form, I think it was -- some government form -- for a transaction over 10K and it was done and over with.
In my opinion -- if your parents are funding your down payment, and you tell everyone your parents are funding your down payment, do it all at once. Or have your parents put the cash all at once into their bank account and write you check. A check won't cause fraud alerts. Their may be a hold on the funds till they clear, so you won't want to do this at the last minute.
If you do it all at once, there will be a form to complete for your parents or yourself, and it will be over. You can explain it, and go on from there.
But if you try to strategically deposit money into your account over a period of time, the bank will catch it (they run programs to do so) and forms that you don't know about will be filled (we had to do suspicious activity reports all the time, and customers don't know about them) and things will be looked at....and cause you a hassle.
You're not doing anything wrong here, so don't act like it. Good luck on your new house!
In my opinion -- if your parents are funding your down payment, and you tell everyone your parents are funding your down payment, do it all at once. Or have your parents put the cash all at once into their bank account and write you check. A check won't cause fraud alerts. Their may be a hold on the funds till they clear, so you won't want to do this at the last minute.
If you do it all at once, there will be a form to complete for your parents or yourself, and it will be over. You can explain it, and go on from there.
But if you try to strategically deposit money into your account over a period of time, the bank will catch it (they run programs to do so) and forms that you don't know about will be filled (we had to do suspicious activity reports all the time, and customers don't know about them) and things will be looked at....and cause you a hassle.
You're not doing anything wrong here, so don't act like it. Good luck on your new house!
Fill out the form.
The government looks for a PATTERN of large cash transactions, not a single one. Depositing $9000 a week will look far more suspicious than one transaction.
That's correct. One form is best. You might want to discuss with your local bank manager to set up an appointment for this, instead of just walking in with it. They'll still have to do the CTR, but it will be a more relaxed environment for everyone.
The government looks for a PATTERN of large cash transactions, not a single one. Depositing $9000 a week will look far more suspicious than one transaction.
Tallysmom - good advice.
Both will raise flags, however, as long as it is all legal money you have nothing to worry about. Now, if your parents are really drug dealers and they are laundering money through you, you have problems.
The bank fills out the form, you will have to fill out another form for your home loan stating where you got the gift, your parents will have to fill out the gift information on their taxes, pay taxes on that gift and with that paper trail, you won't have the feds beating down your door .
What about setting up a foreign bank account (e.g. Cayman Islands, Swiss) and depositing the money there? Though you would have to do a foreign exchange with fees when you buy the U.S. house... Not sure what the reporting regulations are now.... It may set up a bunch of red flags.. Does anyone know how this works?
It doesn't work. It only works in movies. As a US citizen, you'll be required to show your passport and they will report your new account.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.