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Home insurance settlement taxes?
I already know that I will owe no taxes on the home insurance settlement I received. But from my understanding, the bank alerts the IRS when I make a large deposit to my bank account. Therefore, the IRS knows I banked over $20k in one lump last year. How do THEY know it's an insurance settlement? I've searched the internet, and can't find an answer. I'm using TaxAct online for my taxes this year, and so far they haven't asked me anything pertaining to this.
What am I missing here?
2 Answers
- 7 years agoFavorite Answer
Notifications are only made for CASH transactions of $10k or more or a series of smaller aggregate transactions that add up to $10k or more over a short period of time.
The purpose of the reporting is to establish an audit trail on the money. There is already an audit trail on the payment from the insurance company so no further reporting is required. If every transaction of $10k or more had to be reported, the banking system would grind to a halt under the weight of the reporting burden. Heck, kick the reporting requirement to a million and it would still buckle at the knees and probably collapse.
Source(s): I used to work in the banking industry and managed CTR and SAR reporting. - CarenLv 77 years ago
i have moved much more than that and never had them ask any questions
you don't have to inform them about anything
