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As titled, what should we consider when withdrawing a large amount of money (>100K) from a bank account? Do we need to document the purpose of our withdrawal?

From what I could have found:

  1. withdraw in cash – bank reports it to IRS no matter what. Would this affect my tax filing in the coming year?
  2. withdraw in check – bank does not seem to report it. Is this correct?
  3. wire-transfer to another person's account – would this always be slapped with a "gift tax"?

And do we have to document what we do with that money?

To elaborate a bit more (in response to the comment and answer provided by others to my original question):

In the U.S., what documents do we need to prepare in case our large sum withdrawal from the bank triggers a flag in relevant government (local and/or federal) divisions and they decide to investigate? Does the (local/federal) government care if we stash our money (in cash or check) under our mattress, if we purchase foreign properties (taxable? documents needed for proof?), or if we give it away (to individuals or organizations - individual: a gift tax, organization: tax waivable)?

I had come across this article and was blown away by what was stated in the article. It seems that no matter what we do (except spreading thin our assets to multiple accounts in multiple banks), the government will always be notified of any large bank transaction and we would be forever flagged since. Is this correct?

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    How much is "a large amount", and what are you doing with it? You would owe gift tax, if anyone does, but the amount has to be fairly large to trigger that. – keshlam Dec 20 '15 at 4:47
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    The article that you linked is crackpot nonsense sprinkled with just a couple of facts. As noted in answers below, there is reporting on large cash transaction, but that's one of very many things that are reportable in some way. There's no reason to think you're going to jail because it's reported. The other thing in the article, which didn't enter your question, is that your typical bank branch isn't holding this type of cash every day. That's not a conspiracy, it's just logistics. For a large withdrawal, you'll need to make arrangements in advance so that there's enough cash at the bank. – user32479 Dec 20 '15 at 21:24
  • Updated my answer with answers to your follow up questions. – littleadv Dec 21 '15 at 2:02
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withdraw in cash - bank reports it to IRS no matter what. Would this affect my tax filing in the coming year?

No, and no. The bank doesn't report to the IRS. In the US - the bank will probably report to FinCEN. It has nothing to do with your tax return.

withdraw in check - bank does not seem to report it. Is this correct?

Doesn't have to. Still might, if they think it is a suspicious/irregular activity.

wire-transfer to another person's account - would this always be slapped with a "gift tax"?

If this is a gift it would. Regardless of how you transfer the money. Is it?


Answers to your follow up questions:

In the US, what documents do we need to prepare in case our large sum withdraw from the bank triggers a flag in relevant government (local and/or federal) divisions and they decide to investigate?

Depending on what the investigators request. FinCEN would investigate money laundering, the IRS would investigate tax evasion, the FBI would investigate terrorism sponsorship, etc. Depending on who's investigating and what the suspicions are - different documents may be required. But the bottom line is that you should be able to explain the source of the funds and the destination. For example "I found $1M in cash and sent it to some drug lord because he's such a good friend of mine" will probably not fly.

Does the (local/federal) government care if we stash our money (in cash or check) under our mattress, if we purchase foreign properties (taxable? documents needed for proof?), or if we give it away (to individuals or organizations - individual: a gift tax, organization: tax waivable) ?

The government cares about taxes, and illegal activities. Stashing money under a mattress is not illegal, but earning cash and not paying income tax on it usually is. In many cases money stashed under the mattress was obtained illegally and/or income taxes were not paid.

It seems that no matter what we do (except spreading thin our assets to multiple accounts in multiple banks), the government will always be notified of any large bank transaction and we would be forever flagged since. Is this correct ?

Yes, reportable transactions will be reported. Also spreading around in multiple accounts/transactions to avoid reporting is called "structuring" and is on its own a crime.

This is for cash/cash equivalent transactions only, of course.

Not sure about the "forever flagged since", that part is probably sourced in your imagination.

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    Just to add to this given the comments through out the thread that came after the post. There are two limits: Over $10K, a cash transaction must be reported. Over $5K there's a requirement to report any transaction when the bank has reason to believe it's suspicious. (Incidentally, I've read different thresholds - So these numbers may not be completely current.) – user32479 Dec 20 '15 at 21:30
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    Also - Just because it's reported doesn't mean you have a problem. Many, many things that normal people do in the course of their lives are reported in some form to the government. This doesn't mean that you're going to be snatched up by men roping down from black helicopters during the night. – user32479 Dec 20 '15 at 21:39
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    I'm +1 on this answer, but would state this more strongly: "Also spreading around in multiple accounts/transactions to avoid reporting is called 'structuring' and is on its own a crime." Withdrawing large sums of cash, while reportable, is not a crime. Unless you're actually doing this as part of a criminal enterprise, that makes "structuring" doubly stupid since you'd be (a) committing a crime without (b) any sort of benefit to yourself. (If you're intentionally doing it as part of a crime, it's still worse, but I guess no advice here is going to impact your decision in that case.) – user32479 Dec 21 '15 at 17:43
  • Small addition: if as a US person you own certain foreign assets, mostly financial accounts or real property, above certain limits, you must report them yearly under two schemes: FBAR under BSA and form 8938 under FATCA; those search terms will find Qs about them. You only owe tax if there is related income (interest, realized capital gain, rent, etc), and if the foreign country also taxes it you usually can credit the foreign tax against your US tax, but you are required to report them, and if you don't the penalties can be harsh. – dave_thompson_085 Jul 17 '18 at 19:40
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You state "Any info will be appreciated", so here's some background information on my answer (you can skip to my answer):

When I worked for banks, I was required to submit suspicious activity to the people above me by filling out a form with a customer's name, SSN, account number(s) and ID. You may hear in media that it is $10K or sometimes $5K. The truth is that it could be lower than that, depending on what the institution defines as suspicious. Every year we were required to take a "course" which implied that terrorists and criminals use cash regularly - whether we agree or disagree is irrelevant - this is what the course implied.

It's important to understand that many people use cash-only budgets because it's easier than relying on the banking system which charges overdraft fees for going over, or in some cases, you pay more at merchants because of card usage (some merchants give discounts for cash). If someone has a budget of $10K a month and they choose to use cash, that's perfectly fine. Also, why is it anyone's business what someone does with their private property? This created an interesting contrast among differently aged Americans - older Americans saw the banking system as tyrannical busybodies whereas young Americans didn't care. This is part of why I eventually left the banking system; I felt sick that I had to report this information, but it's amazing how quick everyone is to accept the new rules. Notice how one of the comments asks you what you intend to do with the money, as if it's any of their business. Welcome to the New America©!

My answer:

If you withdraw $100,000, here is what will more than likely happen:

  • You will be reported to some authority. In my case it was the management, who reported it to an internal department. I can't honestly tell you what happened after that, except based on the course I had to take annually, it ended up somewhere in the government. For instance, I've wondered if this means that someone lands on a "watch list" or "no fly list", which do exist, but I don't know what triggers a person on these lists.
  • If you're asking what happens to you, I don't know. If you're asking are you going to be watched or reported, more than likely yes. Will it come up on something else? I would assume that it would, based on the course I had to take. Again, the course implied that terrorists and criminals used cash => think about what this means when someone at a bank (or worse, an automated system), sees a $100,000 withdrawal.
  • If it's a gift (and I'm not asking because it's your money - you did mention this), you should review this IRS page only because there may be conditions that apply to your case.
  • Some states accept gold and silver as legal tender, and BitGold makes this a step easier, though I agree that overall, the precious metal payment system is lacking. If you hate tyrannical busybodies as much as I do, maybe paying a premium for privacy will make you happy. For instance, if you were to give 100 ounces of gold to whoever you want, no one would know. If you want to buy goods with gold, some merchants won't do this, but some states like Utah, are making this possible.
  • You may hear about bitcoin, but bitcoin with the blockchain is neither anonymous nor untraceable. If criminals and terrorists use this, they are beyond stupid, as many media articles have admitted that the government is training agents to mine this information. All you need to do is sync wallets with identity, and you know everything. I think that the only private cryptocurrency is Dash, which is short for "digital cash".

Now, watch the anger at this answer because I'm telling you the truth. This article will explain why. Your very question had a negative 1, as if asking what you're asking is wrong (see the absurdity)! If Joseph Stalin ran for president in the United States, the majority of Americans would welcome him. You have good reason to be concerned; others at this site have noticed this as well.

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    LOL, less than five minutes and one downvote. Thanks NSA ;)! – YaReally Dec 20 '15 at 12:55
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    Excellent answer. Excellent. Yet you garnered a - 1 before I got here. Haters will be haters I guess. – Jack Swayze Sr Dec 20 '15 at 12:56
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    Your answer has lots of "I don't knows" and hand waviness, and reads at least partially as more of a rant against the banking system and government than an answer, so I don't think it's just "haters will be haters". I personally think there's enough information that it doesn't deserve a downvote, but I can see why others would think it does. – blm Dec 20 '15 at 19:11
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    I think this answer has some elements of a good answer with a unique perspective. Still -1 because it's interspersed with off-topic asides and personal opinions not related to the question. – user32479 Dec 20 '15 at 21:31
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    -1 for mixing random rants with facts. Don't know what "new america" you're talking about, the BSA has been around for half a century. It's just the $10k limit is now ridiculous, whereas in the 1970's it was considered a large amount of money that no reasonable person would transact in at once. – littleadv Dec 21 '15 at 2:25

protected by Chris W. Rea May 11 '17 at 14:14

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