Here's What Happens if You Deposit More Than $10,000 in Cash Into Your Bank Account

Cash-reporting rules can impact you. 

Depositing cash in your bank account is a regular activity for many people. Whether you make cash tips at your job or receive birthday money from your grandma, putting your cash in a bank account is a great way to keep it safe. However, your bank must report cash deposits over a certain dollar amount. Find out what you need to know about this federal reporting rule.

Banks must report cash deposits totaling $10,000 or more

If you're headed to the bank to deposit $50, $800, or even $1,000 in cash, you can go about your affairs as usual. But the deposit will be reported if you're depositing a large chunk of cash totaling over $10,000.

When banks receive cash deposits of more than $10,000, they're required to report it by electronically filing a Currency Transaction Report (CTR). This federal requirement is outlined in the Bank Secrecy Act (BSA).

While most people making cash deposits likely have legitimate reasons for doing so, that isn't always the case. The government wants to keep a record of large cash deposits to make tracking and tracing illegal activity easier. Proper reporting helps them do their job.

What you need to know about this rule

Some people may wonder if they can get around this rule by depositing $9,500 and then making another $501 deposit a few days or weeks later. You can't get around this rule by making smaller deposits spread out over time.

This kind of activity is referred to as structuring and is illegal. According to the IRS, structuring is the practice of conducting financial transactions in a specific pattern calculated to avoid the creation of certain records and reports.

This federal reporting rule is something to keep in mind if you make cash deposits regularly. If you're making legitimate cash deposits into your bank account, there is nothing to worry about -- but it's good to be aware of this cash reporting rule.

Business owners must report large cash payments

It's also worth noting that people operating trades or businesses must report large cash payments that they receive. If you receive a cash payment of over $10,000 in one transaction or two or more transactions within 12 months, you'll need to report it to the IRS.

You can report such activity by completing IRS form 8300. You and the person paying you will need to provide the details of the transactions on the form. Keep this in mind if you're a business owner who accepts cash payments.

Bank accounts are a great place to store your extra cash

If you're keeping your spare cash in a piggy bank or under your mattress, you may want to start stashing it in a bank account instead. When you keep your money in an FDIC-insured bank account, up to $250,000 of your funds are insured.

If you have significant savings, don't keep all your money in a checking account. You'll miss out on earning interest. High-yield savings accounts offer an excellent way to boost your savings as you earn interest on your contributions. For additional money management tips, the following personal finance resources may be helpful.