How much money can I deposit on my personal account without being reported to IRS?

Question

I have a home-based small side business, and my customers usually pay me by checks with my name on it or cash. Should I file it with my W2 together no matter how much they are, or is there certain amount of money that I don't have to worry about deposit that money on my personal account?

Answer 1

Merely depositing money into an account isn't a taxable event.

All income is subject to taxation. You need to keep careful records of your income and business expenses. File Schedule C with your Form 1040 tax return to calculate the net income from your business. The net income then transfers to Form 1040. If the net income is $400 or more, file Schedule SE to calculate the 15.3% self-employment tax which is also then transferred to Form 1040.

If the IRS suspects that you are underreporting income they can get access to your bank records. Somewhere, some day, someone will report the monies paid to you on a tax return that gets audited. That could possibly trigger an audit of the money trail and catch you out if you're not reporting the income. At that point, you'd have a MASSIVE problem on your hands if you have not been reporting the income.

Answer 2

Yes, Indian politicians and others have numbered accounts where they have stashed foreign currency, not only in Swiss Banks but some German and Austrian Banks as well. Some time back Germany had expressed the willingness to disclose the sources of these black money to India, but Congress led government did not take any interest. Obviously they were trying to save their own politicians.