Resolving a Mattress Fund?

Recent found out that a family friend has been saving a little bit of cash from their paycheck for the past 40 years or so. I told her how dangerous it is to have that sort of cash laying around, and her solution is to simply hide the money better. I want to convince her to put it in a bank, but I’m thinking that since there’s no real record of where the money came from (unless we can find all of her paystubs), it’s going to be a) counted as income and taxed; and b) considered suspicious activity for a little old lady to suddenly be depositing a large amount of cash.

Is there a way to legally handle this so that she keeps the full amount, but just not hidden around her house? I keep reading about CTRs and SARs and “structuring”, all of which make it seem challenging to handle large amounts of legitimate cash. I even called a credit union, the representative of which started laughing hysterically and said “That’s going to raise all sorts of red flags!” I would think that this would be a common enough occurrence for there to be a legitimate way to handle it.

How much is a little bit?

I didn’t inquire too closely, so am guessing maybe $100 a month or so?

Just deposit it in small chunks IIRC they do not consider things to be “reportable” until you cross $10K.

Dropping $2K-$5K into a savings account will not even make a teller blink. They see that kind of cash hourly.

Wait a month or so, drop in another couple thousand, lather rinse repeat.

Might take a few months but it will all go in cleanly and without setting off any alarms.

It does suck that a person can’t even keep their own cash without raising suspicion especially since many banks charge you just to keep your money there. We do need to know how much money is involved though. $7000 is a lot different than $700,000 in the types of flags it would raise. I am curious to know what would happen if it did raise red flags. She didn’t do anything illegal and the IRS can’t just impose taxes just because she decided she didn’t trust banks.

One simple solution is just to get a safety deposit box and put the money there. She can make regular withdrawals from it for casual spending without anyone knowing anything. The only issue I see with that is that some of the bills may be decades old as well and that is certainly odd and will attract attention when they go to the bank.

$100/month for 40 years is about $48,000.

Contents of safe deposit boxes are not insured by the FDIC. They may be covered under an individual’s homeowner’s insurance, but typically cash in a safe deposit box is not covered.

I’d just open a savings account and deposit a few thousand every couple of months like drachillix suggested.

That might work but you still have the old bill problem. Tellers may get thousands of dollars an hour but not in bills from the 1960’s onward. Bills only last a few years in regular circulation tops. The old ones are still good of course but they will attract attention. The reporting requirement isn’t just for deposits over $10,000. It is required then but it can be triggered by anything unusual especially if it looks like the person is trying to stay under the $10,000 limit intentionally by breaking up the deposits.

Still, I wonder what the bank or IRS could actually do if they did get suspicious. There is nothing illegal about what she did. The story is completely plausible especially if there were old bills from each year. If it were me, I would just tell them to kiss my ass and get off my lawn and see what they do then but that’s just me.

Buy some drugs and let the dealers launder it. Take it from me, they won’t care if the bills are old.

Seriously, if she saved the money from her legitimate income, there’s no way the IRS can tax it. It’s already been taxed. It’s what’s left over after taxation. Of course, proof – like pay stubs – would be a good idea.

I would imagine MOST of the bills they get are from 1960’s onward. Onward does mean in the forward direction, time-wise, doesn’t it?

Depositing smaller amounts over time in an attempt to avoid the bank processing a currency transaction report is known as structuring and is punishable by fines and prison. Cite. Banks keep track of significant cash deposits that would add up to more than $10,000 anyway, so it isn’t like making numerous deposits of $6,000 (or whatever) isn’t going to trigger someone’s radar anyway.

Is a li’l old lady going to go to the hoosegow because she kept cash under her mattress? I don’t think anyone would suggest that. But transferring cash from one’s mattress to a bank in a single amount is not a crime, and I can’t think of a single kind of tax that would possibly apply in this situation.

Maybe an attorney would be money well spent (hey, if you’ve saved $100/mo for 40 years, you can afford it at least once!)? Perhaps the friend could even bring the money to the attorney’s office and have him process it, or the attorney could accompany the friend to the bank and be able to advise exactly what to say to the teller if they ask questions.

I’d say just deposit it and see what happens.

They will ask you to fill out some forms, do so, answer everything truthfully.

You’ve done nothing wrong.

If they hassle you, call the ACLU, NY Times, Today show, etc. They love a story like this.

Not only is it completely legal to keep your money in a mattress and deposit it in one large chunk – it’s NOT legal to follow drachillix’s suggestion. Structuring cash deposits in an effort to avoid bank reporting is not legal, regardless of the money’s ancestry.

She should consult a lwayer or an accountant if she has any concerns, but she can simply deposit the money and fill out the cash transaction report required, explaining that this was money kept at home for long periods of time. The age of the bills will corroborate her story.

Obviously, she can’t show up in six months with ANOTHER $50,000 dollars and the same story.

You mean this one?

Just a gosh-darn minute. You aren’t seriously suggesting that depositing a large amount in a bank in one chunk is OK, but the same amount in smaller chunks is illegal?

It is legal to deposit the money. If you deposit a lot, you will have to fill out forms reporting some stuff and may be investigated.

It is illegal to deposit smaller chunks for the purpose of avoiding the reporting requirements of the large deposit.

There are laws requiring disclosures on cash deposits over $10,000. Intentionally structuring your deposits to avoid making these disclosures is illegal.

That’s not what Bricker said. And how would someone prove that multiple deposits are done to avoid reporting, if the money isn’t obtained illegally in the first place?

Man Pleads Guilty to Currency Structuring to Evade IRS Reporting Requirements

So report it already. Nothing wrong with depositing less than $10K at a time, just file the damn papers. Bricker seemed to omit that.

If she has a reasonably secure place to store this cash, leave her to it.

I want to know how exactly the bank knows that is what you’re doing. How does the bank know where the money comes from?