My daughter has $2000 cash and Doesn't know where to put it - UPDATED ORIGINAL POST

JanetRose · Jul 30, 2006

She is entering her second year in college this fall and keeps this money in our safe deposit box. She gets financial aid for school - not sure how it would affect that if she puts the $2000 into a mutual fund or CD.

Does anyone have any suggestions? Thank you very much!

UPDATED: She had cashed in a mutual fund and paid the taxes on it already.

HaleyB · Jul 30, 2006

Students funds are considered avaliable at 33% for finacial aid.
So if she puts it anywhere in her name they will lower her aid package by $660.

Her best bet may be to leave it be in the safe deposit box.

Cool-Beans · Jul 30, 2006

If I had managed to squirrel away a few bucks and not pay the IRS the amount they told me I owed them for it, I sure wouldn't tell anyone about it. Nor would I admit to it on an internet board.

But I report every cent. If I find $50 on the sidewalk, I'll report it as income and pay the IRS the amount they tell me they deserve. Paying taxes is the law and I would never, EVER not pay them! Not worth going to jail over something like money.

coolbeans · Jul 30, 2006

I don't like the idea of leaving in a safe deposit box for the simple reason that "if" the bank were to burn to the ground, explode, flood (not likely, but ya never know) the items in a safe deposit box are not insured and that's money up in smoke. Put it in mom or dad's name in a cd.

coolbeans · Jul 30, 2006

Hey Cool-Beans, I'm coolbeans... nice to meet ya! :teeth:

golfgal · Jul 30, 2006

Cool-Beans said:
If I had managed to squirrel away a few bucks and not pay the IRS the amount they told me I owed them for it, I sure wouldn't tell anyone about it. Nor would I admit to it on an internet board.

But I report every cent. If I find $50 on the sidewalk, I'll report it as income and pay the IRS the amount they tell me they deserve. Paying taxes is the law and I would never, EVER not pay them! Not worth going to jail over something like money.

You do not LEGALLY have to report $50 found on a sidewalk. That is absurd. You have $499 of earned income from one source before you have to report it as income.

To the OP, put the money in your savings account.

Cool-Beans · Jul 30, 2006

golfgal said:
You do not LEGALLY have to report $50 found on a sidewalk. That is absurd. You have $499 of earned income from one source before you have to report it as income.

To the OP, put the money in your savings account.

So I can deposit all the cash I want and tell the IRS that I found it in amounts under $499 and they'll say, "OK, no problem, you don't owe us anything."

Or that, while I made $80,000 begging on the street, it was in small amounts here and there from different people, so I don't owe any taxes?!

Is that right?

golfgal · Jul 30, 2006

Cool-Beans said:
So I can deposit all the cash I want and tell the IRS that I found it in amounts under $499 and they'll say, "OK, no problem, you don't owe us anything."

Or that, while I made $80,000 begging on the street, it was in small amounts here and there from different people, so I don't owe any taxes?!

Is that right?

Where would you get the cash to start????? If you cash your pay check and deposit the money the IRS still has a trail of earned money. If you can panhandle $80,000 on the street, the IRS has no way to track that, so no you wouldn't have to report that.

Cool-Beans · Jul 30, 2006

coolbeans said:
Hey Cool-Beans, I'm coolbeans... nice to meet ya!

How do you do. You have an EXCELLENT name!!!!

Cool-Beans · Jul 30, 2006

golfgal said:
Where would you get the cash to start????? If you cash your pay check and deposit the money the IRS still has a trail of earned money. If you can panhandle $80,000 on the street, the IRS has no way to track that, so no you wouldn't have to report that.

I'm guessing the IRS would differ with you here. My guess is that they'd say, "No, you must report all income and pay taxes on it."

That has been my experience with the IRS.

I also think that if you didn't have to pay taxes on money earned that way a LOT of people, when contacted by the IRS and asked about all that money in their account, would say, "I got it pan-handling!"

Is it possible that you are wrong? Or are you absolutely, positively 100% sure about that?

monkeyboy · Jul 30, 2006

Cool-Beans said:
But I report every cent. If I find $50 on the sidewalk, I'll report it as income and pay the IRS the amount they tell me they deserve. Paying taxes is the law and I would never, EVER not pay them! Not worth going to jail over something like money.

golfgal · Jul 30, 2006

Cool-Beans said:
I'm guessing the IRS would differ with you here. My guess is that they'd say, "No, you must report all income and pay taxes on it."

That has been my experience with the IRS.

I also think that if you didn't have to pay taxes on money earned that way a LOT of people, when contacted by the IRS and asked about all that money in their account, would say, "I got it pan-handling!"

Is it possible that you are wrong? Or are you absolutely, positively 100% sure about that?

I didn't say it was right, I said that the IRS doesn't have a way to track where that money came from, big difference. I know I am right about not having to report finding $50 on the street. I also know that you can be gifted up to $12,000 from one person without having to pay any taxes on that money. Perhaps the OP's DD got the money as a gift and therefore does not have to report that money to the IRS. I pay my taxes, I don't cheat on my taxes but I do know that if I find $50 I don't have to 'report' that as income.

Cool-Beans · Jul 30, 2006

golfgal said:
I didn't say it was right, I said that the IRS doesn't have a way to track where that money came from, big difference. I know I am right about not having to report finding $50 on the street. I also know that you can be gifted up to $12,000 from one person without having to pay any taxes on that money. Perhaps the OP's DD got the money as a gift and therefore does not have to report that money to the IRS. I pay my taxes, I don't cheat on my taxes but I do know that if I find $50 I don't have to 'report' that as income.

I think you might be wrong. I think the IRS rules are that you must report all income and pay them the amounts they say you owe them.

Whether or not they allow a certain limit of "found money" I'm not sure, but I'd bet dollars to doughnuts that you can't put a million dollars in the bank and tell the IRS that you found it in little amounts on the street, therefore didn't have to report it, and owe no taxes.

...but I might be wrong. We count on our Morally Righteous Accountant and Absurdly Ethical Lawyer to tell us what to do. We report every cent. Our kids report baby-sitting money. Our birds would report their birdseed, if the government had a translator for "Parakeet." Not a sould in this house would ever try to cheat the government.

DancingBear · Jul 30, 2006

Gifts are not taxable income. Very large gifts (much larger than $2,000) might be subject to gift tax.

simpilotswife · Jul 30, 2006

DancingBear said:
Gifts are not taxable income. Very large gifts (much larger than $2,000) might be subject to gift tax.

Actually that gift spoken about earlier (I thought it was $10K but it may have gone up) can be given per person gifting without tax impact.

FWIW cool-beans, the OP was not talking about not reporting money to the IRS, she was concerned as to whether the gifts her child received would impact her financial aid.

Maybe you should change your name to Jumping-Beans since you seem to be proficient at leaping to conclusions.

lowie · Jul 30, 2006

Cool-Beans said:
If I had managed to squirrel away a few bucks and not pay the IRS the amount they told me I owed them for it, I sure wouldn't tell anyone about it. Nor would I admit to it on an internet board.

But I report every cent. If I find $50 on the sidewalk, I'll report it as income and pay the IRS the amount they tell me they deserve. Paying taxes is the law and I would never, EVER not pay them! Not worth going to jail over something like money.

i don't recall reading that the money was unaccounted for income.. there are many people who earn money, cash a pay check then put the cash somewhere safe. there are people who receive gifts of cash and put them somewhere.
don't jump to conclusions and then accuse someone of doing something illegal.

Planogirl · Jul 30, 2006

Prize winnings of under $250 don't have to be reported either. As I recall anything over is subject to taxes though and huge ones at that.

GIOny · Jul 30, 2006

This is better then watching Judge Judy! :happytv:

Cool-Beans · Jul 30, 2006

lowie said:
i don't recall reading that the money was unaccounted for income.. there are many people who earn money, cash a pay check then put the cash somewhere safe. there are people who receive gifts of cash and put them somewhere.
don't jump to conclusions and then accuse someone of doing something illegal.

I didn't accuse anyone of anything. I think you are reading between the lines and finding something that isn't there.

If I thought the OP needed to be accused of anything, I'd come right out and say so. Possibly in a pm.

IMHO, the OP's daughter is 100% entitled to do as she pleases with her money.

However, if she is paying taxes on it and being honest with the Financial Aid folks, and our choices are bank box or in the bank, I think she ought to put the money in the bank. That way, she earns a little interest and has FDIC.