Q: Will paying off an $8,000 credit card bill in cash raise a red flag w/ the IRS
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A:
Paying off an $8,000 credit card bill in cash is unlikely to automatically raise a red flag with the IRS. However, there are a few considerations:
1. Cash transactions over $10,000 must be reported by businesses to the IRS.
2. Multiple smaller cash payments to avoid the $10,000 reporting threshold (called "structuring") is illegal.
3. The source of the cash matters - if it's from legitimate, taxed income, there shouldn't be an issue.
4. Unexplained large cash transactions can potentially trigger further scrutiny.
To avoid any concerns, it's best to keep records of the source of the funds used for the payment.
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