Forum

IRS and Bank Accounts
 

Does the IRS know about all your opened bank accounts?

Re: IRS and Bank Accounts
 

That depends on what the real question is.

The simple answer is No.

The real answer is under an audit, if you transferred funds between accounts they can easily find them. If you paid bills from them, they can find them.

But lets say you withdrew funds and got cash from them. Never paid bills, never mingled funds etc... Then no, as of today, they really cant.

That being said, States sometimes can such as MA DOR. They can find most bank accounts. KY DOR very well might know of every balance at any given time.

Myself personally, I am much more fearful of a state than the IRS.

Re: IRS and Bank Accounts
 

Thanks for response. Any deposit into a business bank account gives auditors permission to follow up on where those deposits came from?

Re: IRS and Bank Accounts
 

Short answer is No.

They WILL and CAN demand any bank statements from any accounts they can find.

States though.. some of them can see balances such as KY. That blows my mind.

Re: IRS and Bank Accounts
 

DOR = Dep of Rev. Got it.

KY and MA can see your bank statements?! Wtf

Say you had automatic deposits into an isolated account. No withdrawals/transfers. The depositing party didnt issue a 1099k.

You'd have to keep/spend the funds from the account and/or withdraw as cash only?

Re: IRS and Bank Accounts
 

Yes.

I have accounts like this. Real Paypal accounts and banks. I have been through a MA DOR tax levi and a Federal Forensic audit. I came out ok. State was the worst. Damaged my credit and I ended up spending thousands of extra dollars with a CPA to end up owing $890.00 and a tax lien on my credit report.

My cash accounts were fine.

One thing to keep in mind, states like MA and VT now get 1099ks at $600 Other states such as IL and CA seem to get them sometimes well below the threshold.

I got burned with a MA paypal account. 37k, 54 transactions and a 1099k issued. I was not expecting it.

Re: IRS and Bank Accounts
 

Thanks for responses. Those states seem to be catching a lot people off guard on the forums. Getting audited sounds horrific - dont wish it on any one.

Re: IRS and Bank Accounts
 

The IRS does not have access to monitor bank accounts, nor do they know where everyone has an account to monitor them. Banks are required to report certain transactions to the IRS, such as interest earned on an account.

The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you’re being audited or the IRS is collecting back taxes from you.

The "proper" thing to do is play by the rules to AVOID getting an audit in the first place.

Re: IRS and Bank Accounts
 

Makes most sense to report all earnings. Mostly curiosity what the IRS is / isnt capable of.

Claimed a mining rig as a business expense this year. 99% sure it's legit but rather avoid an audit either way.

Re: IRS and Bank Accounts
 

I think it would be thrown out on audit unless your business is mining specifically. But I would've wrote it off too. :thumb:

Re: IRS and Bank Accounts
 

Agreed.

And not only can the state SEE your balances, they can TAKE THEM!

My state thought I owed them some tax money and I woke up one day to NEGATIVE $3,000 in two different accounts! haha

Re: IRS and Bank Accounts
 

Do you guys pay to have your taxes done?

I did mine again this year online - it took 1-2hrs a day over a week. Not deal breaking but getting to be a little too much time wasted.

Re: IRS and Bank Accounts
 

I might get mine done today.

Re: IRS and Bank Accounts
 

I pay to get mine done but I do all the hard work before hand. Everything from all 3 LLC's is totaled together and given to the tax guy on a printed out spreadsheet. Takes him 10 minutes to put in all the numbers and tell me what's owed. I'm sure I could do them myself but I guess I just like having that professional tax preparer's signature on the form. Peace of mind cost me $175 this year.

As far as totaling everything up that took 2 or 3 afternoons from 5-7ish. I use excel a lot. Put in all the #'s for a category, select all those cells, autosum, rinse, repeat.

WTF man. All my hair would be gray right now if I waited til the last day.

Re: IRS and Bank Accounts
 

Haha, I hate doing taxes. I hate filling orders too. I like finding stuff to sell, that's about it - LOL.

Re: IRS and Bank Accounts
 

Yea the peace of mind bit is nice. Looks more professional. It was $15 to file online this year. Last year H&R was a free service, now it's $70+.

Re: IRS and Bank Accounts
 

Sounds like we're in the wrong business!

Re: IRS and Bank Accounts
 

Every year. Same damn thing. Usually with an hour or so to spare lol...

Re: IRS and Bank Accounts
 

I was baked out of my mind when I was filing but I think mining qualifies as a business. :ranger:

Question
How do you distinguish between a business and a hobby?

Answer
In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. A hobby activity is done mainly for recreation or pleasure. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

1. Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
2. Whether the time and effort you put into the activity indicate you intend to make it profitable.
3. Whether you depend on income from the activity for your livelihood.
4. Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
5. Whether you change your methods of operation in an attempt to improve profitability.
6. Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
7. Whether you were successful in making a profit in similar activities in the past.
8. Whether the activity makes a profit in some years and how much profit it makes.
9. Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

Re: IRS and Bank Accounts
 

Yeah.. but your business is ecommerce isn't it? My interpretation is you're allowed to write off purchases you made for the particular business you're filing for. So unless you have a separate EIN for your mining "business", IDK, your guess is as good as mine. :noidea:

Re: IRS and Bank Accounts
 

You don't need an EIN for a different business. Or for a business, period.

Re: IRS and Bank Accounts
 

$1050/hr. Haha