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IRS audit triggers for large cash transactions.

New York, NY |

I'm worried about the IRS . During debt negotiations / lawsuits , I put my savings ( $ 30s ) onto a bank check and kept it in my safe for a year . Then , we deposited it into my wifes account for a year , and now the money is back in my checking , since we have settled our debts , and In not worried about garnishment anymore . I know the IRS gets reports of transactions of this amount . What is the chance that we will be audited ? The money is absolutely legit . It's a combo of a pension payout , car insurance claim , tax refunds , and just savings . I have receipts to account for most of it . We have never stiffed the IRS in anyway , ever , but I worry about an audit and how extensive a paper trail they would require . . .

Attorney Answers 3

Posted

It's unlikely that your transaction would, on its own, cause the IRS to audit you. The bank would report the transfers to the Treasury Department (not directly to the IRS); since, presumably, you deposited the money back into the account you've had with the same bank for a number of years, that deposit is not likely to be considered the sort of suspicious transaction that raises red flags. In fact, since the deposit into your wife's account would have been reported to the Treasury Department, the fact that it didn't raise an audit for her should give you some comfort that this new deposit probably won't trigger an audit for you.
In terms of a paper trail you might want to preserve, just keep the account statements from your account showing the original withdrawal in check form, copies of the cashed check (if you can find it), the account statements from your wife's account showing the deposit of the funds into her account, and then copies of her account statements and your account statements showing this latest withdrawal from her account and deposit into your account.

With all due respect, depending on why and how you settled with your creditors, I would be more concerned about the round-robin movement of the cash from your wife, back to you being treated as a fraudulent transfer in order to avoid the claims of your creditors.

My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dana@nytaxcounsel or visit my website at www.nytaxcounsel.com

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Bruce Givner

Bruce Givner

Posted

Dana is always correct.

Posted

Schedule an appointment with a CPA and a tax lawyer. Bring all the paperwork with you.

If this answer is helpful, then please mark the helpful button. If this is the best answer, then please indicate it. Thanks. For further information you should see an attorney and discuss the matter completely. If you are in the New York City area, then you can reach me during normal business hours at 718 329 9500 or www.mynewyorkcitylawyer.com.

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Bruce Givner

Bruce Givner

Posted

Jayson is correct.

Posted

Relax. First of all, it isn't strange that you accumulated 30k in savings unless you haven't worked for the last 10 years. You are talking about cash transactions. If you went and dumped 30k in cash into the bank, they might ask questions. But it isn't because you have 30k. It is because you are carrying around more than 10k in cash, and that makes them question the source of the proceeds. Not many people keep their 30k in savings as a "wad" of cash under the mattress. This makes them suspicious. But having 30k accumulated in a bank account over time does not make you look like you are a drug dealer in the way having 30k in cash does.

Christopher Larson
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Bruce Givner

Bruce Givner

Posted

Christopher is always correct.

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