How much tax exactly would be deducted from an amount (for example $20,000) deposit in a bank?

Question

According to some answers here, no tax is involved when simply depositing it. What if this money is from a sold property from a foreign country and was bankwired to my bank. Is this something that should be declared to IRS even if this is not an income made here?

Answer 1

Whenever $10K in cash moves, the bank must notify the IRS. This is more because of money laundering rules than tax purposes.

Moving $20K from your wallet into a bank account does not create any income. Therefore, there's no tax and no deduction or withholding.

But, you will have to be able to explain to the IRS how you got your hands on $20K in the first place.

Answer 2

There's no direct tax on the deposit itself. The bank is required by law to notify the Treasury Department of any transaction of $10k or more or aggregate transactions of $10k or more over a short period of time.

Since the money came from a foreign country may be required to file a Form 3520 return explaining the source of the funds.

Since this was for the sale of property you very possibly may have capital gains taxes to contend with. The difference between your adjusted basis (cost) and the net proceeds from the sale is taxable gain. How long you held the property will determine the tax rate. If it was inherited property or if you owned it for more than one year, it's taxed as a long term capital gain. The rate is 15% unless your marginal rate is 15% or lower where the rate is 5%. If you held it for one year or less (and did not inherit it) the gain is taxed at your marginal rate, whatever that works out to be.

Capital gains taxes are not subject to withholding but you will have to pay it when you file your return. Depending upon how the numbers work out, you may need to make an estimated payment using Form 1040-ES by January 15, 2008 (or file your return and pay any tax due by then) to avoid penalties and interest for underpayment of estimated taxes.

Answer 3

they wont deduct anything, but even if YOU dont report it, the bank has an obligation to notify the IRS of any transaction of 10k or more. The property was not here, but you LIVE here, so the money WAS made here. You live here, you have to pony up your portion of the taxes it costs to run the place you live. You can deduct some expenses though and limit the amount of tax you do pay.