I have about 40,000 dollars in credit card debt, I have the all the cash to pay off my debt now. my question is, If I pay off all 40,000 dollars debt within 1-2 weeks do you think that may trigger any IRS audits? Or should I pay it off over several months, but I will pay alot of extra interest charges, if I wait that long. Also, if you deposit 40,000 into my bank account within 1-2 weeks may that trigger IRS audits? Advice would be thankful!
If the $40K came from a legal source, I don't see why there would be any worries.
If you are depositing $10,000 or more in Cash, the bank is required to report the transaction on Form 8300 to the IRS.
But as Lisa said, if the cash came from a legal source then there should be no problems.
And if you make several deposits less then $10K each over a period of time to avoid the reporting, it is called "structuring", which can be a crime.
Here is a Washington Post article on structuring laws and the $10K reporting.
<a href="https://www.washingtonpost.com/news/the-watch/wp/2014/03/24/the-federal-structuring-laws-are-smurfin-ridiculous/" rel="nofollow" target="_blank">https://www.washingtonpost.com/news/the-watch/wp/2014/03/24/the-federal-structuring-laws-are-smurfin-ridiculous/</a>
If someone is gifting you this money, they could pay the credit card company directly.
thank all of you for your advices! another question, lets say if you have a bunch of capital one credit cards, instead of depositing cash into your bank account, you instead just go to capital one bank locations and walk-in and hand them the cash and your credit card and tell them I want to pay off my outstanding debt balances, if you do it that way you DO NOT need to deposit cash into your bank account to pay off your debt. If I do it like that, will I avoid IRS reportings by not depositing cash to my bank account? advice would be very thankful!
"have a bunch of capital one credit cards." These are all yours?
yes the capital one cards are mines, should I just go to a capital bank location and pay my credit card debt there instead of depositing money to my bank account then paying online?
That also sounds like structuring. Just deposit the money in your main bank account. If the IRS has questions about where you got that much money, presumably you can answer them truthfully.
If the money is taxable income of some kind, you should report it and pay the tax. If it is not income, be ready to prove it. If the money is from some illegal source or is legal but you are trying to avoid tax, we aren't really here for that kind of advice. If the money is perfectly legal and not taxable, structuring will turn a legal activity into a crime for no good reason.