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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello! I have inherited money and wish to pay off high-debt

Resolved Question:

Hello!
I have inherited money and wish to pay off high-debt credit cards. If I do that all at once, could it send up red flags to the IRS? We earn approx. $100,000 per year and the debt amount is half that.

Thank you! Diane
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
Hello santa,

I am not sure why you think this would creat red flags? Are you worried about reporting the inheritance money to the IRS?

Customer: replied 4 years ago.
Hi Merlo -
No, I understand that I will not be responsible for income tax on this money. I had just heard that if a large amount of money starts moving in an account - ie, paying of debit rapidly - it could cause the IRS to ask questions. Is this not correct? The money is being posted tomorrow and I want to get the debit out of my life ASAP.
Diane
Expert:  Merlo replied 4 years ago.
Hello again Diane,

First of all, the IRS does not track your bank account activity. The only time that the IRS might actually look at your bank activity is if you were to happen to be selected for an audit, and the examiner thought it necessary to examine your bank records. This does not happen in most cases. But even if such an event were to occur, the fact that you can show you inherited this money, and you used it to pay legitimate bills that you owe, there is nothing illegal about that, and you would have no problems with the IRS.

High activity in your account is not reported to the IRS. The only time that a bank reports suspicious activity to the IRS is if someone makes a CASH deposit of $10,000 or more in one transaction. Deposits that you make in the form of checks, or bills that you pay in the form of checks, are not reported to anyone.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you Diane

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 2 other Tax Specialists are ready to help you
Customer: replied 4 years ago.
THANK YOU! I know what I'll be doing tomorrow!!!!!!! Diane
Expert:  Merlo replied 4 years ago.
Thank you Diane

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