Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
priscillasanchez
New Member

If I deposit $8,000 lump sum into my checking acct would that get flagged by IRS or cause a flag when I apply for a house next year?

 
2 Replies
rjs
Level 15
Level 15

If I deposit $8,000 lump sum into my checking acct would that get flagged by IRS or cause a flag when I apply for a house next year?

A single deposit of $8,000 would not be "flagged" by the IRS. The IRS wouldn't even know about it.


I don't think it would cause any problems buying a house, either. When you say "apply for a house," do you mean apply for a mortgage? The lender is not likely to know about the deposit. They might ask the current balance in your checking account at the time that you apply, but they wouldn't look at past transactions.


But where does the $8,000 come from? And when you say "lump sum," do you mean that you are depositing cash? If the IRS has other reasons to think that you might be hiding income, they could audit you and look at your bank deposits. Then you would have to explain where the $8,000 came from, and why you did not report it as income. They would be particularly likely to ask about a large cash deposit if there is no record of where the cash came from.

 

Opus 17
Level 15

If I deposit $8,000 lump sum into my checking acct would that get flagged by IRS or cause a flag when I apply for a house next year?

All your “income” is presumed taxable, unless you prove otherwise.  In the unlikely event that you are subjected to a full compliance audit, the IRS can ask you to prove the source of every bank deposit and show that it is either taxable income, or that it is some type of nontaxable gift or other non-taxable transfer.  However, full compliance audits are extremely rare. 

There is also a banking regulation that requires the banks to report to the IRS any money transfers of $10,000 or more. This is mainly to help prevent money laundering, and the IRS will normally not assume that such transfers are taxable, and they rely on taxpayers being honest with their tax returns. However, if you need to transfer more than $10,000 and you do it in several smaller steps to avoid the reporting rules, that can actually constitute a separate crime called “structuring“ even if the underlying purpose of the transfer is totally legal.

 

As far as mortgage lending is concerned, that does not involve tax regulations and so this forum will be less able to give solid information.  In my own past experience, the banks that I have applied to for mortgages have wanted to see the source of any large or unusual deposits that were made to my account in the two or three months prior to my mortgage application. This is not a tax problem, but the mortgage lender wants to be sure that I have not taken out an undisclosed loan that would make it harder for me to re-pay my mortgage.  My mortgage lenders have asked me to provide proof that large deposits were either a withdrawal from my retirement account, or a gift from my parents, or the proceeds of some other large sale, so that they can be confident that I do not have undisclosed obligations that would make it harder for me to repay the mortgage.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Dynamic AdsDynamic Ads
Privacy Settings
v