Which bank transactions must be reported to the Feds?

Is this also true for small business accounts?

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Is this also true for small business accounts?

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Yes, however the bank has some discretion in that if the bank "knows the customer" it may not report smaller transactions which total over $10,000 because the customer's relationship manager understands the nature of the customer's business.

However, because of the draconian money laundering fines the bank might be subject to if it does not report transactions and it is later determined that non-reporting contributed to the bank's customer being able to launder money, many banks take a very conservative view and report EVERYTHING which might be even the slightest bit suspicious.

Thanks guys. It's a wonder that the wife and I have yet to be audited.

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Any cash or cash equivalent transaction exceeding $10,000 or any transaction(s) the bank classifies as unusual in nature or not customary by that customer,

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this. I received student loan money once at over $10k in cash, went to the bank to deposit and they took pictures, thumb print and asked alot of questions.

also, that was a long walk back from the field house to my car parked by the AG center lot.....

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I would still be nervous with the IRS microscope.

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As you should be.

The process itself is painful and time consuming even if you've done nothing wrong. The worst part is they make you feel like you're guilty of something so you have to prove you're innocent of everything.

As self-employed, I got questioned by the IRS about a payment made to me by a foreign client and it was NOT a pleasant method of questioning.

The irony is I had called the IRS 1-800 Help Line when I was completing my taxes (I do all of my own tax reporting just to force me to be current on tax laws) and I followed their instructions to the letter on how to report that foreign income. Thankfully, I kept the IRS person's ID # who I talked to and was able to use that information in describing my conversation and why I did what I did on reporting the income.

Thankfully, after several months I received a release letter from the IRS requiring no further action on my part.

Still I felt like I was about to go to prison at any minute for doing the right thing!

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However, because of the draconian money laundering fines the bank might be subject to if it does not report transactions and it is later determined that non-reporting contributed to the bank's customer being able to launder money, many banks take a very conservative view and report EVERYTHING which might be even the slightest bit suspicious.

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Dudes! HSBC FTW!

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.

I've used TurboTax for about 18 years.

One of the features of TurboTax is you can see your IRS "profile" regarding the possibility of an audit after you complete your taxes each year. It gives you an estimate of your chances of being audited based on the income/expenses/personal information you entered for your return.

I would guess if you do that, based on what you've said, you would have a "low" risk of being audited or being "targeted."

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

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It's straight to prison if not the firing squad.

Just kidding...

In my case they wanted an explanation of the income I showed on my return that they didn't have any information for such as a W-2 or 1099. It never got to the fines and penalties status so I can't really answer your question with any authority. Poodlebrain, who posts on this board, is a CPA and he can probably give you a very accurate answer.

However one year the La. State Department of Revenue lost my enclosed W-2's (before I started my own business and became self employed) and they wrote me a letter telling me I showed too much withholding on my state return and I owed them money for penalties and interest.

When I figured out they didn't include my state withholding from my W-2 I sent the "local" copy of the W-2 (which we don't have to use because we don't have a local income tax). I pointed out the "missing" withholding was on the W-2 and about 2 months later I got a letter from them saying "nevermind." I assume the IRS has some similar type procedures in place.

Russian, as always, thanks for the detailed response!

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One of the features of TurboTax is you can see your IRS "profile"

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We have always been very low. Even with that, I use some of our return to purchase the audit assistance they offer.

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Just kidding...

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Yeah, I figured I would have a chance to make up the difference/prove why I did what I did, but I never know. And the thought of my 6'0, 180 lb arse in prison does not sound entertaining!

And FWIW, we always do what we feel is right, never try to take advantage of anything, just be by the book. I did not want my questions in this thread to come across as us trying to game the system.