re: Which bank transactions must be reported to the Feds?

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Not gonna start a new thread, and not trying to hijack, but I worry about the IRS every single year I file my taxes. I use TurboTax, the wife and I make a little less than $100k a year, but I still worry. I get the audit protection that Turbo Tax offers. The past few years we have had a rental property, but other than that, nothing out of the ordinary.

My question(s), with the small amount of money we make, are we really "targeted" or are they after bigger fish?

If I was somehow in the wrong, do they give you a chance to pay the difference? Or is it straight to prison?

I know, probably stupid questions but I am a worry wart.

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If you're wrong, they'll send you a bill. If you owe less than $25,000.00, than you can set up an installment agreement without having to go through a financial statement (trust me, I've had to do it, it's excruciating). However, the worst thing you can do is ignore them, even if you don't owe much or can't pay. If you ignore them, they can proceed with wage garnishments, liens, levies, and in some cases, yes prison.


Yes there are "bigger fish", but they do enjoy making examples of people, so don't risk it.

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What's your strategy on business deductions? Balls to the wall?

And what % of business expenses to income (1099 & self-employment incomes) do you think raises a red flag? 20%? 30%?

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Take every possible deduction you can, if it's not allowed, they will let you know. Best to meet with a good accountant, I cannot stress this enough. A qualified EA CPA is gonna keep you legal and will save you much more than they charge in fees. Been 1099/ Self employed for 10 years, certain things are flagged, such as home office deductions. But if you can prove you use a certain amount of square footage for business, you're golden pony boy.

Deduct every mile you drive for business, this deduction alone reduced my taxable income by $15,000 last year, HUGE. Keep a drive log though.

Thanks - I hired a new CPA this year for just that reason. He's willing to bend some things a bit more than my old CPA cared to.

Regarding the car, my business miles are not that much (<1000 last year), so someone advised me to lease my car to my business for $500/month - while I then can't write off mileage, that's $6k a year of lease expenses, plus all gas and all oil changes, maintenance, etc. So we're going to give that a shot this year

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Thanks - I hired a new CPA this year for just that reason. He's willing to bend some things a bit more than my old CPA cared to.

Regarding the car, my business miles are not that much (<1000 last year), so someone advised me to lease my car to my business for $500/month - while I then can't write off mileage, that's $6k a year of lease expenses, plus all gas and all oil changes, maintenance, etc. So we're going to give that a shot this year

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Sounds like a good idea if you need a car, if you don't need the car, I wouldn't spend the $6K + maintenance,etc to save $1K in taxes. That made sense in my head, not sure I worded it properly though

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What's your strategy on business deductions? Balls to the wall?

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No. I only deduct what I have receipts for and can prove I use in my business.

I have a service (consulting) business so there are no "cost of goods" type expenses and most of my direct expenses are reimbursed to me by my clients, such as airfare, meals while traveling and hotel expenses. So my deductible expenses usually average much less than 5% of my revenue.

My biggest deductible business "expense" is my annual contribution to my SEP.

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And what % of business expenses to income (1099 & self-employment incomes) do you think raises a red flag? 20%? 30%?

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I have no idea. Sorry. Maybe Poodlebrain can help you with that question.

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shite, I just deposited two large checks from family members that will probably throw up a red flag. About one week apart from each other.

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Over $10K each? If it's a gift it's not taxable until $13,000 I think.

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If it's a gift it's not taxable until $13,000 I think.

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$14,000 starting this year, 2013.

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Over $10K each? If it's a gift it's not taxable until $13,000 I think.

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Everything I read stated that the person giving the money has to claim if they give over that amount. The one receiving it doesn't have to claim anything

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Right - what I meant was that it is "my" car and already paid for. But instead of writing off mileage, I'll just lease my own car to my business, thus deducting my "lease payment" along with gas and maintenance.

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this doesn't really accomplish anything. you would have lease income = to lease expense.

I work at a bank, I may be able to shed some light on this.


Anytime we take in or give out over $10,000 we must fill out a CTR- "Currency Transaction Report". In this report we send (presumably to the feds) your name, address, SS#, the amount deposited/withdrawn, which accounts were affected, and if any negotiable instruments were purchased.
We are instructed to ask the customer their occupation, SS#, and make a copy of a valid ID.

There are several customers who regularly make large deposits/withdrawals over $10,000 and we have pre-filled CTRs on hand for them- churches, grocery stores, etc.

We have a few customers who try to avoid having CTRs filed on them at all costs. They regularly deposit or withdraw $10,000 or less. Be wary of this, however. If there is a pattern of what appears to be avoiding a CTR, financial intelligence will call the bank up and inquire about you. If they deem it necessary they will forward your information to the Feds.

I've had to speak to several IRS agents about customers in my two years at the bank. If we believe a customer is avoiding a CTR we are encouraged to fill out a SAR- Suspicious Activity Report. This likely is communicated to the Feds, not sure though.

I don't blame people for avoiding CTRs, have never filled a SAR, and think its ridiculous what lenghts we have to go to in order to intrude in people's financial affairs. Just giving everyone some more information.