What Happens if You Deposit More Than $10,000 in Your Bank Account?

Depositing $10,000 in a bank account may not seem like the most criminal activity. And, nine times out of 10, it really isn't. But occasionally, depositing a large sum is an indication of something more clandestine, like money laundering or selling drugs. And to nip those activities in the bud, big deposits might trigger a report to the federal government. If you frequently make deposits over $10,000 in your savings or checking account, here's what you should know.

Banks report cash deposits totaling $10,000 or more

Banks have to report any deposits above $10,000 to the IRS on a form known as the Currency Transaction Report. Yes -- even if it's only $10,000.01.

It's not just deposits, either. Banks are required to report any transaction of over $10,000, including withdrawals. And if you think you can avoid reporting by separating your big transactions into smaller ones, you'd be wrong. This is known as "structuring," and banks are required to report that, too. For example, if you deposit $3,500 today, $3,500 tomorrow, and $3,500 two days from now, your bank would report the transactions to the IRS.

Now, don't get the wrong impression -- the IRS isn't necessarily going to hound you because you deposited $10,000 in a bank account. The federal reporting is in place to help the federal government track financial crimes, so as long as you're not doing anything illegal, the federal government likely won't care.

How to legally deposit $10,000 or more

The best way to deposit $10,000 or more is simply to do it. Don't structure the deposits or try to evade reporting requirements. If you don't want to draw attention to yourself, then just deposit the money and go about your day.

On the other hand, you'll likely run into problems if you try to break big deposits into smaller chunks with the purpose of evading the federal government's vigilance. Even if you're not doing this with illegal intent -- such as you simply want to be left alone and don't want the federal government tracking your activities -- it could lead to unnecessary problems down the road.

All in all, banks are still the safest place to store your money. When you make deposits at an FDIC-insured bank, your money is insured up to $250,000 per depositor. (Joint accounts are insured up to $500,000.) What's more, you can withdraw this money freely, even if a large transaction does trigger a report.

If you're depositing $10,000 into an account intending to keep it there for the long run, make sure you're earning interest on it. These days, it's not hard to find a savings account that earns above 5% APY (though this could change in the future). Check out our list of best savings accounts and see how much that $10,000 could earn you.