paying credit card bills using cash

[demilia765]

What is the name of your state? Florida

I have several thousands of dollars of cash (100 dollar notes) which my late father gave me before his death few years ago. I kept that cash in his memory for all these years. Now I wish to spend it. I heard that if I deposit more than 10,000 in my bank account, the bank completes IRS form 8300, and IRS may come after me. If I pay my credit card monthly payment dues (the monthly dues each month are in the range of two thousand dollars) using that cash, each month, by physically going to the bank that issued the credit card, then will it also be reported by that bank to IRS in the same way the banks report the deposit above 10,000?

 

[Just Blue]

What is the name of your state? Florida

I have several thousands of dollars of cash (100 dollar notes) which my late father gave me before his death few years ago. I kept that cash in his memory for all these years. Now I wish to spend it. I heard that if I deposit more than 10,000 in my bank account, the bank completes IRS form 8300, and IRS may come after me. If I pay my credit card monthly payment dues (the monthly dues each month are in the range of two thousand dollars) using that cash, each month, by physically going to the bank that issued the credit card, then will it also be reported by that bank to IRS in the same way the banks report the deposit above 10,000?

How much money are you talking about?

 

[demilia765]

It is around 45K.

 

[Just Blue]

It is around 45K.

Can you show where your father got the money from? Do you know where it came from?

 

[Taxing Matters]

I have several thousands of dollars of cash (100 dollar notes) which my late father gave me before his death few years ago. I kept that cash in his memory for all these years. Now I wish to spend it. I heard that if I deposit more than 10,000 in my bank account, the bank completes IRS form 8300, and IRS may come after me.

The bank is required to submit a currency transaction report (CTR) when it handles cash transactions for customers, including deposits to accounts, that exceed $10,000 in a day or that appear to be part of a structured transaction (multiple transactions of less than $10,000 that are meant to evade the reporting requirement). Structuring transactions to avoid CTR reporting are a federal felony crime punishable by up to five years in prison. CTR reports are not made to the IRS on Form 8300. They are filed with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) using FinCEN form 104 or, more commonly, electronically. FinCEN does share that information with the IRS. It is NOT a crime to deposit cash of any amount to your bank account so long as you not structuring deposits to avoid reporting. However, the potential issue that comes up with the IRS is whether that cash was taxable income. Inheriting cash is not taxable income, So if you can convince the IRS the cash was from your inheritance then there will be no tax to pay here. How that would go depends on what evidence you have of inheriting the cash, how skeptical the IRS examiner is of your explanation, etc. It would have been better to deposit the cash shortly after your father's death than holding the cash in your house (or wherever) for years, which makes it harder to show the source of the cash.

If I pay my credit card monthly payment dues (the monthly dues each month are in the range of two thousand dollars) using that cash, each month, by physically going to the bank that issued the credit card, then will it also be reported by that bank to IRS in the same way the banks report the deposit above 10,000?

While the probability of the bank reporting those monthly payments on a CTR is not all that high, what you are proposing to do is technically structuring since you are breaking up the $45,000 into chunks under $10,000 with the purpose of evading CTR reporting. As a result there is some risk that you could end up prosecuted for that. Again, it's not likely a high risk, but there would be some risk of that.

IRS Form 8300 is filed by businesses (other than financial institutions filing CTRs for that transaction) that receive cash from customers in amounts exceeding $10,000. So if you took the $45,000 in cash and bought a new car, the car dealership would be required to file the Form 8300 since it doesn't file a CTR and it received more than $10,000 from you in its course of business. Once again, structuring transactions to avoid the Form 8300 filing requirement is illegal.

 

[LdiJ]

What is the name of your state? Florida

I have several thousands of dollars of cash (100 dollar notes) which my late father gave me before his death few years ago. I kept that cash in his memory for all these years. Now I wish to spend it. I heard that if I deposit more than 10,000 in my bank account, the bank completes IRS form 8300, and IRS may come after me. If I pay my credit card monthly payment dues (the monthly dues each month are in the range of two thousand dollars) using that cash, each month, by physically going to the bank that issued the credit card, then will it also be reported by that bank to IRS in the same way the banks report the deposit above 10,000?

You could just spend it as cash. You could load some of it onto a prepaid debit card if you needed some on a debit card. However, if you got it from your father a few years ago and he had been saving it for at least a few years himself, then its likely that it has a lot of older 100 dollar bills or is even mostly older 100 bills. If that is the case, it would be difficult to spend. Many places will no longer accept older 100 dollar bills.

In that case I would recommend that you deposit it all in the bank at once, and ask the teller to document how many older 100 bills were there, since that would eventually be helpful in demonstrating to the IRS (if the issue arises) that this is money that you have had for a long time.

 

[demilia765]

Thanks for all your knowledgeable feedback. For the last few months, I used some of that cash to pay my brother’s credit card bills (each time around 1000 dollars, and 5 times, that is a total of 5000 dollars) by going to the bank that issued his credit card. Each time, the bank took my driver license and, probably kept a scanned copy of it and, gave me back the driver license. If and when the IRS determined that there was currency transaction report or IRS Form 8300 on these cash payments, who will be responsible for answering these cash transactions? I or my brother or both?

 

[doucar]

I expect that you will since the bank took your identification.

 

[davew9128]

All these decades in the business and I am still stunned at the level of paranoia towards benign transactions and the fear of the IRS.

 

[Just Blue]

All these decades in the business and I am still stunned at the level of paranoia towards benign transactions and the fear of the IRS.

Maybe it's not paranoia if the 45k was ill gotten gains. It's kind of strange that Dad gave his child 45 thousand in 100 dollar bills and s/he kept it as a keepsake for years. IMO anyway.

 

[demilia765]

Thanks for your replies.

If IRS comes after me for some other tax related matters (which have nothing to do with I paid my brother’s credit card bills with cash) then, will the IRS automatically get the information that I paid my brother’s credit card bills with cash as well (because that bank took copy of my driver license when I paid my brother’s credit card bill) and can question me about that also?

 

[Taxing Matters]

If and when the IRS determined that there was currency transaction report or IRS Form 8300 on these cash payments, who will be responsible for answering these cash transactions? I or my brother or both?

Potentially both. The reason for filing CTRs and Forms 8300 is to track what happens to cash because (1) cash is more likely to be used in criminal enterprises and (2) cash is more likely to be used by those trying to evade income tax. So what the IRS and Treasury are concerned about is what was the source of that cash. Since you were the one that had the cash and made the cash transaction, you of course would be considered as potentially having illegal or taxable income. And because you were ding the transaction on behalf of your brother, they would also consider the possibility that he gave you the money for the transaction so that reports would be filed in your name instead of his. The CTR does not report the exact transaction done, but does report who provided the cash and also on whose behalf the transaction was done. See FinCEN 104 for what sort of things are reported.

I suggest you are overly worrying about the CTR. If the cash is really from an inheritance and you can provide some evidence of that then just depositing it should not be a big deal here. Structuring your transactions to avoid the reporting risks potentially much greater problems for you than the risk of having to pay some income tax if you just deposit it. And by depositing the money, you can then make the best use of it, rather than doing things with it that are less than optimal in an effort to avoid reporting.

 

[demilia765]

Thanks for your responses!

If have an idea, could someone address my last question also?:

If IRS comes after me for some other tax related matters (which have nothing to do with I paid my brother’s credit card bills with cash) then, will the IRS automatically get the information that I paid my brother’s credit card bills with cash as well (because that bank took copy of my driver license when I paid my brother’s credit card bill) and can question me about that also?

 

[LdiJ]

Thanks for your responses!

If have an idea, could someone address my last question also?:

If IRS comes after me for some other tax related matters (which have nothing to do with I paid my brother’s credit card bills with cash) then, will the IRS automatically get the information that I paid my brother’s credit card bills with cash as well (because that bank took copy of my driver license when I paid my brother’s credit card bill) and can question me about that also?

It is not illegal or even questionable to pay bills in cash. Not many people do it, but it is not illegal or questionable. They took your information because you were paying a bill for someone else.

 

[FarmerJ]

I pay cash for my electric bill IF I am going to pass the co_ops offices on the way home in the morning, I pay the trash bill in cash because the garbage hauler has a office in town, Telephone not possible but they have a drop box at the telephone company exchange building in town for checks. I dont like giving out my bank card number so I have used pre paid cash cards OR postal money orders when i didnt want to give out my card number. the electric co has never asked who I am when i am paying the bill in cash. propane delivery If someone is going to be here we pay in cash . My neighbor who uses the same propane service most of the time just leaves a money order under a clothes pin on her tanks pigtail and its never lost or blow away.