I live in the US. A complete stranger knocked on my door, gave me a pallet of $20 bills (which in total amount to several hundred thousand dollars), and left without saying a word. As far as I can tell, this money is legally mine. What do I do about my tax return?

  • 72
    I'm guessing this is a hypothetical question...
    – Ben Miller
    Commented Oct 23, 2017 at 23:21
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    LOL! Before you calculate taxes, consider authenticating the currency. You don't want to pay taxes on money that came from the stranger's printing press. Commented Oct 24, 2017 at 0:59
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    I've picked up packs of 500 $2 bills, I can easily hold them in one hand and put in my jacket pockets. If $20 each, that's $10K. A couple shoeboxes would hold $300K, no need for a pallet. Commented Oct 24, 2017 at 1:05
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    Don't forget about the draconian "civil forfeiture" laws. If the authorities suspect the money might have come from illicit sources, they can take it and you have zero recourse. Unless you can prove that it was legally obtained (and "a stranger left it on my doorstep" is not sufficient proof) you risk losing all of it.
    – Floris
    Commented Oct 24, 2017 at 2:28
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    @GTonyJacobs Because that's an easy way to get the FBI to come a-knockin'. People have been laundering money for a very long time, and pretty much any simple or easy trick is already regulated to raise red flags. Commented Oct 24, 2017 at 13:32

8 Answers 8


As a gift, the responsibility lays with the giver to file a 709 with their taxes for gifting to a single entity (barring certain exclusions) an amount over $14,000 within the (2017) tax year. https://www.irs.gov/pub/irs-pdf/i709.pdf

If this person is a foreign entity from outside the country, you might need to provide in your tax filing a form 3520 https://www.irs.gov/businesses/gifts-from-foreign-person The reporting limits are: more than $100,000 from a foreign estate or non-resident alien, or more than $15,102 from a foreign company.

If you don't know who/where the money came from i.e. cash, it would be considered found money and fall under income (not a gift).

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    Do you file a 3520 if you don't know the nationality and/or identity of the one making the gift?
    – Mast
    Commented Oct 24, 2017 at 4:34
  • Updated for the case where you don't know the origin. Also added specific reporting limits for the 3520 form.
    – Shorlan
    Commented Oct 24, 2017 at 15:58

Do I have to explain the source of all income on my taxes?

"Yes, you do", say the ghosts of Ermenegildo and Mary Cesarini.


The Cesarinis argued to the IRS that the money wasn’t income, and so it should not be taxed as such. The IRS wasn’t swayed by the couple’s argument. The case went to federal court, and the IRS won. “Found” property and money has been considered taxable income ever since.

If You Find Cash

The IRS plainly states that taxpayers must report “all income from any source," even income earned in another country, unless it is explicitly exempt under the U.S. Tax Code. This covers a wide range of miscellaneous income, including gambling winnings. According to the Cesarini decision, money you find isn’t explicitly exempt.

The tax impact won’t be significant if you find an item of property with a fair market value of only $500 and are in the 25% tax bracket. You’ll owe the IRS $125 ($500 x .25 = $125).

However, if you are a finder and keeper of $10,000, your tax burden will be $2,500 ($10,000 x .25 = $2,500).

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    This isn't found money, this is a gift. There's a huge difference between the two cases for tax purposes. Commented Oct 24, 2017 at 2:59
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    @DavidSchwartz If you can't confirm the identity of the one giving you all this money, I'm not so sure it's different. Basically you found a pallet on your doorstep. Whether someone else dropped it there or not you can't prove, so won't it default to found money?
    – Mast
    Commented Oct 24, 2017 at 4:37
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    @Mast I understand that it's weird that it makes a difference, but the law is the law. Someone giving you a pallet of money intentionally is legally different from you finding a pallet of money that nobody intended to give you. I don't know why the law is that way, but it is. (You would have to be able to determine that it is a bona fide gift. And you may not be able to do that if you don't know who the giver is. For example, if the giver is an agent of your employer, it's not considered a gift. Or if the gift source is foreign, you must file a declaration.) Commented Oct 24, 2017 at 4:43
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    @jamesqf "why should they be paying tax on a piano they purchased?" They had to pay tax on the $4467 cash inside the piano.
    – RonJohn
    Commented Oct 24, 2017 at 11:04
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    Details do not support the headline, which is incorrect. You only have to explain if you're claiming money is non-taxable; you specifically do not have to explain the source of taxable income (this is the way that they get around Fifth Amendment claims of illegal income). Commented Oct 24, 2017 at 17:25

This is a case where you sit down with an advisor or two. There are legal, and tax issues.

When you deposit the cash, or buy a car with it, the large cash transaction will trigger a notice to the US Government. So they will eventually find out.

Before you get to that point you need to know what obligations and consequences you will be facing. Because you don't know if it was a gift, or found money, or if the owner will be back looking for you to return it; therefore you need expert advice.

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    Admittedly I'm new to this community, but this doesn't answer the question. The OP knows there may be tax issues, hence asking "What do I do about my tax return?" In my opinion this should be a comment, asking if its known this is a gift etc.
    – DavidT
    Commented Oct 24, 2017 at 11:59
  • My answer is see an expert. If this was a real situation then the amount of money at risk by doing it wrong is considerable. Commented Oct 24, 2017 at 12:18
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    @mhoran_psprep OK, but "Ask a professional in the appropriate field" is an answer to essentially any question that could be posted on this site. So you're not really conveying any information, here. Commented Oct 24, 2017 at 12:50
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    "if the owner will be back looking for you to return it." This is a good time to buy a gun, and possibly hand over the cash to the police.
    – jpaugh
    Commented Oct 24, 2017 at 16:22
  • @DavidRicherby and DavidT: both of you are new to this community, so it's understandable that you'd not know how this community works. Mhoran does, being one of our most well respected members. In Personal Finance and Money, sometimes the correct answer is to go see an accountant/expert, and that's perfectly acceptable as an answer. (cont)
    – Joe
    Commented Oct 26, 2017 at 5:53

You can report it as illegal income and you don't have to elaborate any further.

For instance, spirit the cash off to a state where pot is legal and set up a dispensary. That is not legal at the Federal level, so it is in fact "illegal income" vis-a-vis your Form 1040 and that's all you say.

Make sure you look, walk, and quack like a fairly successful pot distributor. That will most likely be the end of their inquiry, since they're not terribly driven to investigate the income you do report. Having to give 33% of it to the IRS is generally strong motivation for folks to not report fake income. You're not claiming the money is from pot, you're allowing them to infer it.

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    I think that's called money laundering. Commented Oct 26, 2017 at 21:40
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    @Derek_6424246: I wouldn't think so. You use money laundering to hide where illegally earned money comes from (and that it is illegally earned). In this case, nothing is hidden. Money laundering would be if you open a restaurant, take your $100,000 made from drugs, pretend that your restaurant has $100,000 revenue and say $80,000 profit, pay tax on the $80,000 and take the rest home.
    – gnasher729
    Commented Oct 26, 2017 at 22:01
  • @gnasher729: I'm with you all the way- money laundering is any process used to conceal the source of income for the purposes of avoiding adverse tax / legal ramifications. Trying to "look, walk, and quack like a fairly successful pot distributor" and hoping that the government doesn't notice what your actual situation is, crosses the line into shady territory. Commented Oct 27, 2017 at 19:03
  • @Derek_6424246 In the US only revenue from specified unlawful activities (SUA) can possibly be laundering, and that is the law. It CANNOT apply to money that is legally sourced, and the government must prove the pallet came from SUA. It goes without saying that you are not stupid enough to commingle pallet money and pot money, in fact, there's no need for the dispensary to even be real... or yours, its purpose is stagecraft for the IRS's benefit. Simply meeting the IRS in somebody else's pot dispensary would probably suffice. Not that the audit would ever happen. Commented Oct 27, 2017 at 20:03

@RonJohn's answer for pallet of $20's is right for the specific case. For the general case of all income, it depends on whether or not the the source of the income was potentially criminal.


I am not a lawyer, but reading that article, one needs to provide the total amount, but not the source if there's a risk of self-incrimination.


Well, that's probably not even all of it. If that stranger did his taxes properly, then he already paid about a third of it to the government because wherever he got it from it was income for him and thus it must have been taxed.

Now, the remainder is in your hands and yes, according to US law it is now your income and so now you too, must pay about a third of it to the government, and yes you are supposed to explain where it came from.

Be careful giving it to somebody else or it'll be taxed yet again.

disclaimer: I am not a US citizen

  • Gifts are not taxable income under US law. Commented Oct 25, 2017 at 23:42

Nah. Fill it in on the line that says "Other Income" with type of "5th Amendment".

There's lots of reasons why you might want to do this, and it's the government's job to find out which one, and they're not allowed to use the bare fact that you put 5th Amendment there to open an investigation.


Appears to be a hypothetical question and not really worth answering but...

Must it be explained.. no, not until audited. It's saying that for everything reported on a tax return, people have to include an explanation for everything, which you do not, unless you want to make some type of 'disclosure' which is a different matter.

Must it be reported.. Yes, based on info presented. All income is taxable unless "specifically exempted" per the US Tax code or court cases.

Gift vs Found Income... it's not 'found' income as someone gave (gifted) the money to him. Generally, gifts received are not taxable and don't have to be reported.

  • 2
    If it's a gift then it's not income and isn't reported (on taxes) unless from a foreign source. If it's not a gift then it's reported. Your answer is self contradictory.
    – Joe
    Commented Oct 25, 2017 at 19:59
  • There's the exception to gifts when gifts taxes aren't paid (yes, it did happen in the past) and the recipient would be liable for it, but it doesn't really happen nowadays as it's rare.
    – MrMojo
    Commented Oct 25, 2017 at 20:34
  • @MrMojo What are you saying? That gifts are rare nowadays?! I think most parents of children ages 18 to 30 would disagree. Commented Oct 25, 2017 at 23:43
  • Instead of putting words into someone's mouth or misreading the comments, recommend learning more about Gifts and its tax history. Most people don't realize that much of the tax laws have "Exceptions" to them, which helps explain why the US tax laws are so complex with all its nuances. Gifts are not rare. Generally, gifts are not taxable to the recipient. If there's any gift tax involved, it's the responsibility of the person giving the gift. What's rare nowadays is the 'exception' when the person giving the gift can not pay the gift tax; then the gift recipient may have to pay that tax.
    – MrMojo
    Commented Oct 26, 2017 at 0:59

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