This is what happens if you deposit more than $10,000 in cash in your bank account

Cash reporting rules may affect you.

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Key points

• Many people regularly deposit cash into their bank accounts.
• If you plan to deposit a large amount of cash, you may need to report it to the IRS.
• Banks must report cash deposits that total more than $10,000.

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Depositing cash into your bank account is a normal activity for many people. Whether you tip cash at work or receive birthday money from your grandmother, depositing your cash in a bank account is a great way to keep it safe. However, your bank will report your activity to the IRS if you make a large cash deposit above a certain dollar amount.

Banks report cash deposits totaling $10,000 or more

If you head to the bank to deposit $50, $800, or even $1,000 in cash, you can go about your business as usual. But the deposit may be reported if you are depositing a large amount of cash. When banks receive cash deposits of more than $10,000, they must report it to the IRS.

While most people who make cash deposits probably have legitimate reasons for doing so, this is not always the case. The government wants to keep a record of large cash deposits to make it easier to track and trace illegal activities.

Anyone who deposits more than $10,000 in cash into their bank account should know that their bank will report the deposit by completing IRS Form 8300. It’s also worth noting that this rule applies to more than just cash deposits.

If you plan to deposit more than $10,000 in foreign currency, cashier’s checks, traveler’s checks, or money orders, your bank must also report the bank deposit to the IRS. However, personal checks are not a problem and do not apply to this rule.

What you need to know about this rule

Some people may wonder if they can get around this rule by depositing $9,500 and then making another deposit of $501 a few days or weeks later. You cannot circumvent this rule by making smaller deposits.

The IRS requires Form 8300 to be filed if more than $10,000 in cash is received from the same payor or agent in any of the following ways:

• in a lump sum
• In two or more related payments in 24 hours
• As part of a single transaction or two or more related transactions within 12 months

This is something to keep in mind if you make regular cash deposits. If you’re making legitimate cash deposits into your bank account, there’s nothing to worry about, but this cash reporting rule is good to know.

When are you responsible for filing IRS Form 8300?

It’s also worth noting that you may need to fill out an IRS Form 8300 if you operate a trade or business and someone pays you in cash. If you receive a cash payment of more than $10,000 in one transaction or two or more transactions, you must report it. You and the person paying you will need to provide the transaction details on IRS Form 8300. Keep this in mind if you own a business that accepts cash payments.

If you keep your extra money in a piggy bank or under your mattress, you may want to start saving it in a bank account. When you keep your money in an FDIC-insured bank account, up to $250,000 of your funds are insured.

If you have significant savings, don’t keep all your money in a checking account. You will miss out on earning interest. High-yield savings accounts offer a great way to build your savings as you earn interest on your contributions. For additional money management tips, the following personal finance resources may be helpful.