Cash is King!

Or is it?
Cash can hurt you. Stay with me for a minute. This is some: "I don't want to get audited" advice...

So, I've already talked about several ways to get cash (aside from a job):

• Recycling bottles & cans
• Cashing in credit card rewards points
• Asking family for help
• Have a Garage Sale

and as of today, I have 5 more "get cash" topics scheduled for future posts.




So, that seems good, right? We get cash. We are happy. We pay our bills. Then our 'vendors' are happy. Win-Win. Right?


WRONG!

Or, should I say, "Not always".

My "wonderful" (<-- that is sarcasm) ex husband got me not only a full-bankruptcy, but a Federal Tax audit about 12 years ago.


One of the issues was money deposited into my bank account. I had to go through every single deposit that went into my personal bank account for two years. EVERY PENNY! I had to say exactly where the money came from, and if I didn't know exactly, they deemed it to be taxable income, made me pay taxes on it, plus a penalty for not filing it and for being late! It came up to about $27k. Nice, eh?! UGH! I hate that man!


And, my Godmother had the same type of issue happen to her. They owned two properties that were back-to-back. Her mother lived in one of them. When her mother died, her boss offered to rent the house and use it for business purposes. However, her boss had my Godmother pay for all expenses and then he reimbursed her. She had so much cash going through her bank account that the IRS stuck their nose in. She got a federal tax audit off of it too.


And, it doesn't matter how legitimate you are, they are going to find some reason to fine you.




So, a couple of pieces of "free advice":

• If you get cash from something that you aren't going to report on your taxes, if you can, don't deposit it to your bank account. Use it for gas, car repairs, groceries, etc. Use it for something that is not entirely trackable.
• Don't deposit cash that is not received from your W-2 or 1099 work.
• If you do deposit cash that is legitimately received but isn't taxable income (such as recycling, or reselling merchandise through a garage sale) KEEP NOTES! Where did the money come from? Keep receipts from Recycling. Keep a copy of the advertisement for the garage sale - or a picture of your sale of stuff with customers in the mix.
• One more thing, banks have started CHARGING for depositing too much cash - so there is one more reason to be cautious! The amount tends to be high, but still. Check out the "fine print" in your banking agreement before putting a bunch of cash in your account.

And remember: The IRS is watching!!!

CYA, my friends!

(CYA = Cover Your A$$!!)