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How much cash can you put in the bank without tripping something?
Is it that if you put a thousand dollars in cash in the bank it trips something with the IRS, or is that just money orders? How much money can I put in the bank at once without tripping something? (Ironically, its the money I saved up for my tax bill that I wanna put in the bank).
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Re: How much cash can you put in the bank without tripping something?
federal threshold for mandatory IRS cash transaction reporting by the bank is $10,000. Some states have lower mandatory state tax agency transaction reporting (with New York being $3000), that also finds its way back to the IRS. However, bank tellers have been given directives that they should report 'suspicious activity' by bank customers, and those 'suspicious activity' reports do not have a minimum cash trigger level.
If you're only talking about a one time $1000 deposit, I doubt this would be considered a 'suspicious activity'.
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Re: How much cash can you put in the bank without tripping something?
How do we find out what the amount is for our state? Arizona in this case.
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Oh, cool. I have nowhere near 10G, so I'm safe. :-)
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Re: How much cash can you put in the bank without tripping something?
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How do we find out what the amount is for our state? Arizona in this case.
Perhaps there is something on your state tax agency's website.
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Re: How much cash can you put in the bank without tripping something?
If its reportable earnings and you walk in, not acting like a fool, and deposit it, you should be fine. If they ask, tell them you have a jewelry and basket weaving business and are depositing your earnings from a vegan festival in Taos. J/k Lena, you should be fine if its money for taxes.
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^ Oh, I wasn't worried about trouble with the bank, just didn't want to raise any red flags with the IRS.
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Re: How much cash can you put in the bank without tripping something?
Also, with money orders it's $3K, not $1K, I believe.
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If you're hones with your pay anyway, doesn' i not really mater if it trips somehing?
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It helps when the bank has a note on file on your account stating where the cash comes from. Mine says I have rental units and that explains the cash deposits.
I never deposit or move more than $2900 at a time unless the trail is accounted for.. ie, the selling of a publicly traded stock, real estate, etc...
I'm not breaking any laws, but, rather I don't want to be 'suspicious' either.
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Re: How much cash can you put in the bank without tripping something?
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Also, with money orders it's $3K, not $1K, I believe.
nope, the US Postal service and all of the private money order companies will whip out a form and start asking for personal details if the total amount of money orders that a person attempts to buy from the same place on the same day exceeds $1000. This is a result of the 'terrorist anti-money laundering treaty'.
The $3000 threshold is the typical cash transaction / large purchase threshold automatic reporting requirement enacted by many states, which supersedes the $10,000 federal automatic reporting threshold. Naturally, if the state income tax people receive a cash transaction report they will share it with the IRS as well.
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If you're hones with your pay anyway, doesn' i not really mater if it trips somehing?
well that depends. 'Tripping something' will increase your chances of being audited. And with 'independent contractors', who do not have official third party documentation of 100% of their actual income (i.e. W2, 1099), there is always the possibility that the IRS can argue that an independent contractor earned more money than they reported (even if the independent contractor DID report all of their income). Lack of 3rd party documentation is a two edged sword. Also, independent contractors also typically have a lot of business expense tax deductions, many of which are based on conflicting IRS rules. Thus even if an independent contractor has been 100% honest in filing tax returns, this is no guarantee that upon close examination the IRS will agree with everything entered on that tax return (or the previous 2 years tax returns either).
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Re: How much cash can you put in the bank without tripping something?
If you claim EVERYTHING you put in the bank on your tax return, and your tax return states that you are an exotic dancer.....what's the problem? Am I missing something?
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it's not a income tax reporting issue, rather a 'red flagging' issue. Us dancers always report 100%.
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Re: How much cash can you put in the bank without tripping something?
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If you claim EVERYTHING you put in the bank on your tax return, and your tax return states that you are an exotic dancer.....what's the problem? Am I missing something?
I'm not sure that this has happened in your 'neck of the woods', but in the Northeast there have been quite a few incidents where dancers were audited and the following happened ...
- the IRS looked at the amount of regular cash deposits that were passing through dancers bank accounts
- the IRS then looked at the amount of spending / investing that the dancers were engaged in i.e. car title purchase info, credit card statements, checks, IRA contributions etc.
- the IRS looked at the statistical average cost of living that they had computed for the area the dancer lived in (which was HIGH i.e. NYC area)
- the IRS then concluded that, based on the high level of spending i.e. expensive car, credit cards, IRA maximum etc. that the dancers were actually earning more money than they claimed (which actually wasn't true since NYC dancer earnings potential has been down for the last couple of years)
- the IRS then asked the dancers to provide authoritative 'proof' that they did not actually earn as much money as the IRS was estimating that they must be earning (fueled by such things as media reports by NYC dancers claiming to earn $2k a night)
- all the dancers could provide in the way of unarguable 3rd party documentation was the 1099's they had received for club payouts on customer credit card transactions ... the rest was 'self-generated' documentation for tip and private dance / VIP income that the IRS didn't believe.
- the dancers then got faced with either having their assets frozen by the IRS until they could go before a tax court judge with a high probability of losing their argument, or accepting a 'settlement' that involved paying X thousand extra dollars in additional taxes and penalties. Since the accountant and/or legal fees involved in going to tax court would have been nearly as expensive as paying the 'settlement' with no guarantee of winning their argument that their reported earnings WERE their total earnings, they chose the lesser of the two evils.
So yes since dancers work in a 'cash business', where ultimately the records of business income are self-generated, there can be a major credibility problem. This credibility problem is compounded if the dancer has also piled on a bunch of questionable tax deductions, if the dancer has neglected to file and pay quarterly estimated taxes etc. as it all forms an arguable pattern of tax avoidance where a tax court judgement might be concerned.
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Re: How much cash can you put in the bank without tripping something?
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Originally Posted by
britneyireland
If you claim EVERYTHING you put in the bank on your tax return, and your tax return states that you are an exotic dancer.....what's the problem? Am I missing something?
Claim everything and THEN some, is what I do. Because it is true, I sometimes don't put a 50 in there or I pay for a few things cash before I deposit.... it happens... and the government will assume that too. So I always actually have a tally of exactly what I made cash and tip and what I deposited. If I really wanted to, I could probably know what to claim below what I actually made because I keep such a tight record but... I like being honest and I want to buy a house.. and a $100k income looks much nicer to good ol' Uncle Aus than a 80k income.
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Re: How much cash can you put in the bank without tripping something?
^ It's not that I'm worried about "getting caught" for something that I'm actually doing. I just know soo many strippers who've been audited and the IRS just randomly decides that they made 200k over what they reported and they have to pay like thousands of dollars every month or else go to jail. I mean, if I got audited, how would I PROVE to the IRS that I made exactly what I said I did? I don't think my little calendar where I jot things down is good enough. And what if they said, well, look, this one time you put 5k in the bank in the space of a month, you must have been making at least that all year, when honestly I didn't work for more of the year than I did? I just try to avoid the whole audit thing.
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Re: How much cash can you put in the bank without tripping something?
that is the unfair part. if the IRS believes you to make a certain amount, they are tough to fight.
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Re: How much cash can you put in the bank without tripping something?
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I just know soo many strippers who've been audited and the IRS just randomly decides that they made 200k over what they reported and they have to pay like thousands of dollars every month or else go to jail. I mean, if I got audited, how would I PROVE to the IRS that I made exactly what I said I did?
The IRS knows that 'independent contractor' dancers have no authoritative way to prove that they DIDN'T earn as much money as the IRS may estimate that they did - which is the whole reason that audits of dancers usually provide a whole bunch of 'extra' tax revenue for the IRS in exchange for their effort.
Nevertheless, there are several things that dancers can do to minimize their 'risk'
- don't get crazy with deductions, cash transactions or other yellow flag wavers
- don't purchase upscale cars, designer jeans and purses, trendy condo's, or other high ticket items that would lead a tax judge to believe that the dancer's lifestyle requires significantly more earnings than are declared on her tax return.
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Re: How much cash can you put in the bank without tripping something?
^ Well, yeah. I mean, I live in a van, how much money could they possibly think I have?
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no fixed physical address (home/apt) can be its own flag for terrorist/drug-related/insert other illegal activity...
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Re: How much cash can you put in the bank without tripping something?
^ I got me one of those, even though I don't live there. :-)
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Re: How much cash can you put in the bank without tripping something?
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Originally Posted by
Melonie
So yes since dancers work in a 'cash business', where ultimately the records of business income are self-generated, there can be a major credibility problem. This credibility problem is compounded if the dancer has also piled on a bunch of questionable tax deductions, if the dancer has neglected to file and pay quarterly estimated taxes etc. as it all forms an arguable pattern of tax avoidance where a tax court judgement might be concerned.
The tax authorities use guidelines for income for such professions. In other words, the expect certain workers, such as dancers, to have incomes that are between $x and $y. Of course, they don't reveal what those bands are.
If you are outside of those bands, you are automatically suspicious.
From their perspective, this has nothing to do with deductions - as suggested above. After all, you keep receipts for deductions. That bit you should be able to prove fairly conclusively. They do of course have an idea as to what those deductions should be - so if an individual has gone crazy with things, that may be investigated too.
The income part is different though...
Apparently, the statistics they use are a nationwide and historical average. That means that if an industry is dishonest, you could probably get away with a lot - but why take the risk?
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Re: How much cash can you put in the bank without tripping something?
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Apparently, the statistics they use are a nationwide and historical average. That means that if an industry is dishonest, you could probably get away with a lot - but why take the risk?
actually, the IRS has it all the way down to comparing incomes of people who list the same 'job code' in the same 'zip code' area !
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Re: How much cash can you put in the bank without tripping something?
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Originally Posted by
britneyireland
If you claim EVERYTHING you put in the bank on your tax return, and your tax return states that you are an exotic dancer.....what's the problem? Am I missing something?
But who doesn't cheat on their taxes? Even people with "normal" jobs do.
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Re: How much cash can you put in the bank without tripping something?
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Originally Posted by
Melonie
federal threshold for mandatory IRS cash transaction reporting by the bank is $10,000. Some states have lower mandatory state tax agency transaction reporting (with New York being $3000), that also finds its way back to the IRS. However, bank tellers have been given directives that they should report 'suspicious activity' by bank customers, and those 'suspicious activity' reports do not have a minimum cash trigger level.
If you're only talking about a one time $1000 deposit, I doubt this would be considered a 'suspicious activity'.
is it suspicious if I always deposit money in cash, usually in denominations of $20s?