Depositing Saved Cash

Hey everyone, I’ve been self-employed in home remodeling for over 4 years now. Early on, a lot of my clients paid me in cash, and I’ve managed to save up about $30k. The money has just been sitting around in cash, and I realize now that’s not the smartest idea. I’m looking to put this money to better use, maybe by investing it.

My concern is about depositing this cash into the bank. I’ve already reported and paid taxes on this income in the years I earned it. Will depositing it now raise any red flags with the bank or IRS? Do I need to report anything extra or worry about being taxed again on money I’ve already paid taxes on? I just want to handle this properly without any issues.

Would appreciate any advice or insights! Thanks!

Just deposit the money. The IRS doesn’t monitor your bank account activity.

Chen said:
Just deposit the money. The IRS doesn’t monitor your bank account activity.

Are you a “well-known” customer at your local bank branch?

The bank will have to file a “CTR” for such a cash deposit, but by itself that is No Big Deal—especially if they know who you are and see you regularly. (Also, that form stays with the bank, I’m told, so is only needed by them in case their auditors ask for them.)

@Milan
CTRs are filed with FinCEN, and are generally no big deal to the customer who deposits the money. The IRS will only look into transactions if there is a big audit and allegations of fraud. They do not monitor bank accounts. OP says they can document taxation of the money, so they don’t need to worry.

@Chen
Yeah, I had one filed on me a couple weeks ago, at a small local branch where they know me, and it’s entirely possible that the local tellers do NOT in fact know where the paperwork really goes.

Basically, they photocopied my DL, and wrote my SSN and phone number on the same sheet, and that was it.

But, they see me every stinkin’ week and know who I represent, so I’m not expecting any blowback or even feedback. Good to know; I would guess that “somebody sniffing around” is far more likely to be FinCEN than IRS.

@Milan

Good to know; I would guess that “somebody sniffing around” is far more likely to be FinCEN than IRS.

FinCEN maintains the database. The most likely agency sniffing around is probably DEA or FBI, in the sense of “we think this guy is in cahoots with the cartel, let’s see if he’s done anything suspicious in the federal databases.”

@Bliss
Upvote for intelligent use of “cahoots”—thanks!

If you have already paid tax on the money, you can do whatever you want with it. However, you will have to pay tax on any interest, dividends, or realized gains from investing the money.

Please at least tell us you’ve been keeping it in a fireproof safe?

Get it in the bank. I’m getting 4% interest. You can invest it in other areas with more risk but greater gain potential as well. Sitting with it at home, it’s just losing value.

@Teagan
Nope, I was stupid, and I didn’t keep it in any safe, lol.

I’m planning to take $5k and pay off credit cards, and the rest to put in stocks like VOO or SPMO.

Don’t be alarmed when the bank asks you about the source of the funds, they are required to report large cash deposits to comply with the Bank Secrecy Act. The purpose of this is to fight money laundering, not tax compliance, so you don’t need to be concerned unless you’ve been laundering money.

(And before you think “I’ll just make multiple smaller deposits,” note that structuring deposits to attempt to avoid this report is illegal even if the source of the funds is totally legit. They can and do report smaller deposits if they suspect structuring.)

Depositing it will trigger the bank filing a Currency Transaction Report. That’s routine. You have all your documentation, so you’re covered.

Don’t try multiple smaller deposits (less than $10K)—that’s “structuring” and it’s illegal.

I deposited $250K for my boss one time. No issues at all—but I told the bank I was coming.

You don’t need to report anything yourself. The bank will ask you some questions so that they can file a Currency Transaction Report. The CTR gets filed with FinCEN, and goes into a massive database along with millions of others. It almost certainly won’t be looked at individually unless law enforcement already has some reason to be looking at you, i.e., suspicion of fraud, money laundering, or tax evasion. This isn’t something to be afraid of. It’s routine. Just answer the bank’s questions honestly. Don’t try to split up the deposits to avoid the CTR requirement, as that’s actually a crime.

The bank will file a form with FinCEN, but it won’t affect you.

The IRS doesn’t care about your bank account. Just deposit the money. Be honest with any questions they ask you and there won’t be any issues.

If I were in the same situation, I’d use it to buy gold/silver or other tangible investments rather than put it in the bank. Just my 2 cents…