A NEW INCOME

A New Income Q&A

Q: Does the IRS get involved when you make a large deposit into bank account?

I'm thinking about investing in the new Iraq dinars which is a very LOW investment right now with the possibility of HUGE return. I'm already researching pros and cons, so not looking for opinions on this investment. My questions are... *IF* that day ever comes when I do have an obscene amount of money to deposit into my account, does the IRS automatically step in to take a piece? If so, how much? Is there a certain deposit amount at which this occurs (i.e. any deposit over $10K raises a tax flag)? Also, would something like this be considered "income," to be declared on my tax forms? Thank you for any info you can offer.

A: the IRS won't automatically withhold taxes in this case. The financial institution is legally obligated to report transaction of more than $10,000 to the IRS. So if you deposit more than $10,000 in one transaction, or in a series of related transactions, the bank will let the IRS know. If you buy the dinars for let's say $10,000 now, and sell them in two years for $50,000, the $40,000 gain will be considered taxable income to you.

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