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

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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!