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I followed the link, yes it does say $10,000 for cash transactions.
When I was notified that my transaction was being reported to the IRS I was in Ct, at a 'Dime Bank'. I was depositing a $3,000 check written from a Scottish bank.
I later asking an IRS auditor about it. He explained to me the process of flag setting, and how all US banks are required to file a quarterly report giving the total sum of all deposits.
Why are feds involved in a legit bank to bank transfer?
When doing a bank to bank transfer of less than $3,000.00 does the bank send it from their bank to the feds then the feds release it to the recieving bank? Both parties have accounts at said banks, plus the bank sending said it would take 24-48 hrs. I am goin on 57 hrs. How long does it normally take the feds to release the money, and why does it go to the feds?
I have been told that it is now $3,000 for any transaction that is not a paycheck. I was told this by a bank teller.
Also every quarter, every bank Talley's all deposits into every account, and sends that tally to the IRS. At the end of each year, the IRS knows the Gross tally of all deposits that have been made into all of your bank accounts.
Obviously if you file a schedule 'C' then you are operating a business out of that account, so the IRS uses different formulae to look over these numbers.
Say for example that your schedule 'C' business is coded '0001', then the average, '0001' business shows a profit margin of 10% of their gross. So depending on how far above 10% you are, will determine if a flag is set on your return and the value of that flag. [I do not recall all of the business codes, they should be listed in a pub 17]
Considering what type of activity you are doing: so long as your taxable profit runs nearly average as compared to other folks with the same tally of deposits, then you will not be audited.
If you opened two accounts at two banks, and each week transferred your direct deposit paychecks from one bank to another, it would show as if you had doubled your income, and it would set a flag at that value. As the IRS works through their audit flags, they process them down from the highest value toward the lower values. If the IRS gets to your flag, then you get audited.
So if I report a higher profit margin than my competitors, I'm more likely to be audited? Because I'm probably hiding taxable income?
When doing a bank to bank transfer of less than $3,000.00 does the bank send it from their bank to the feds then the feds release it to the recieving bank? Both parties have accounts at said banks, plus the bank sending said it would take 24-48 hrs. I am goin on 57 hrs. How long does it normally take the feds to release the money, and why does it go to the feds?
Your money does not go through the federal government.
SARS reports are sent to Fincen which is part of the treasury. It doesn't get sent to the irs. And the reports are done for cash or cash equivalents. The amount to report can be any amount. I can have a SARS done on a 1000 deposit or 10,000 or 1mm
So if I report a higher profit margin than my competitors, I'm more likely to be audited? Because I'm probably hiding taxable income?
It was explained to me by IRS auditors [multiple times, though admittedly many years ago], there are many things that can set these 'flags'.
All such 'flags' are indexed. The software ranks them by order of how much they estimate that you are skipping on your taxes.
They can not do audits on everyone. They prioritize on those who are thought to hold the greatest out-standing back-taxes.
Individual deposits over 'X' amount are reported to the IRS individually. The IRS has their standard for 'X', though individual banks may set their own policies to make 'X' any amount they choose.
Total sum of quarterly deposits are reported to the IRS quarterly.
If you use 2 banks, and you 'bounce' every paycheck from one bank to the second bank. The IRS is getting reports of your total deposits as being twice the amount of your paychecks. Obviously people do move cash around from bank to bank, it happens every day. The IRS software looks for trends that would indicate 'laundering'.
It was explained to me by IRS auditors [multiple times, though admittedly many years ago], there are many things that can set these 'flags'.
All such 'flags' are indexed. The software ranks them by order of how much they estimate that you are skipping on your taxes.
They can not do audits on everyone. They prioritize on those who are thought to hold the greatest out-standing back-taxes.
Individual deposits over 'X' amount are reported to the IRS individually. The IRS has their standard for 'X', though individual banks may set their own policies to make 'X' any amount they choose.
Total sum of quarterly deposits are reported to the IRS quarterly.
If you use 2 banks, and you 'bounce' every paycheck from one bank to the second bank. The IRS is getting reports of your total deposits as being twice the amount of your paychecks. Obviously people do move cash around from bank to bank, it happens every day. The IRS software looks for trends that would indicate 'laundering'.
Who reports these deposits to the irs? It's not the banks
Who reports these deposits to the irs? It's not the banks
Icemodeled said: "When I worked as a teller, any deposit over $1750 cash in one day got reported"
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Why are feds involved in a legit bank to bank transfer?
