Does the IRS track every check deposited by me?

Question

Is there a maximum amount limit on exceeding which the tracking starts? Or does each and every check deposited by me gets tracked by IRS for reconciliatory purposes?

Answer 1

They don't track checks at all.

If you make a cash transaction for an amount that exceeds the reporting limit (circa $10K), then a Currency Transaction Report will be filed with the US Department of the Treasury (not IRS, but close) about it. This is to detect and prevent money laundering.

Answer 2

The IRS gets notified when you:

• Earn job income (Form W-2)
• Earn interest/dividend income, retirement income or sell securities. (Form 1099)
• Earn royalties
• Earn partnership income (Form K-1, K-2)

(Note this is not a comprehensive list)

As littadv mentioned, banks are required to send a CTR for any transactions over $10,000. They also are obligated to file a SAR (Suspicious Activity Report) for transactions deemed "suspicious" by bank policy. These filings are primarily for law enforcement purposes. The IRS may or may not have access to this information.

The IRS isn't all-seeing or all-knowing. But -- In the event of an audit, checks do provide a paper trail documenting the origins of your deposits. So if you fail to report income from an "off the books" job, or do not fully report self-employment income, deposit records could be used against you. You are particularly vulnerable to this if you are in a profession where "off the books" transactions are routine -- plumbers, auto repair, vending machines, etc.

At the end of the day, give Caesar his due, and you'll have alot less to worry about.