Got a big, fat check? Congratulations! But before you swim in those dollars, there are a few things to consider. Whether you’re wondering about insurance claim check cashing or IRS return check cashing, cashing large checks is a little different than cashing your paycheck every few weeks. So, here’s what you need to know before cashing a big check to get your money and stay out of jail (yes, we said jail).
1. Reports to the IRS
In the United States, there’s a law called the Bank Secrecy Act—sounds cool, right? This law requires banks and check cashing places to file transactions of over $10,000 in Currency Transaction Reports (CTRs) to the IRS.
The Bank Security Act helps prevent money laundering and combat tax evasion. It is a routine procedure for large check deposits. There’s no need to panic; Uncle Sam just wants to keep an eye on things.
Form 8300 is another form that a check cashing service is required to file with the IRS within 15 days to report a cash transaction of over $10,000. Again, it just helps the government prevent and detect illegal financial activities by creating a paper trail for large amounts of money. They can detect red flags, making it way easier to combat financial crimes.
2. Structuring: Don’t Even Think About It
You may think that you’ve found a loophole to get around the IRS. But think again. Breaking your check into smaller amounts cashed or deposited separately to avoid reporting is called structuring, and yep, you guessed it—it’s illegal.
Check cashing services and banks notice and report structuring in Suspicious Activity Reports (SARs) that are filed with the Financial Crimes Enforcement Network (FinCEN). And a bank or check cashing store isn’t actually allowed to inform you that they’ve filed a SAR on you, so it’s important to just deposit or cash a check in one go. If a SAR has been filed, it doesn’t necessarily mean a crime has happened, but it does mean you’ll be under the microscope.
Act smart—we don’t want to hear about you on any kind of white-collar crime podcast.
3. Get Your Documents Ready
The bank or check cashing store isn’t going to hand over that large sum just because you’ve got a great smile—they’ll need a bit more to make it happen. So, before you head out, make sure you’ve got all your documents in order.
First up, you’ll need a valid government-issued ID. This is a must to cash any check, especially a big one. Don’t forget, you’ll also need to fill out the CTR from tip one, which means you’ll need to verify your name, Social Security Number, and address.
Being prepared with all this information helps speed up the process, so you can get your cash faster. You’ll be in and out with your money before you know it.
4. Source of Funds: Show the Receipts
When you’re cashing or depositing a large check, don’t be surprised if the check cashing store or bank asks for proof of where you got the money, such as invoices or receipts. It might seem a bit nosy, but it’s all part of how financial institutions keep an eye out for suspicious activity, including financing illegal activities.
It’s really nothing to worry about if your funds are perfectly legal. If you’re coming in with a big legal settlement check for cashing or a similar reason, just show them the proof. It’s a breeze and keeps everything above board. So, keep those receipts handy, and you’re all set.
5. Look Out for Scams
Large checks can be cause for raised eyebrows when it comes to scamming. It’s smart to stay on your toes and make sure you know where the money’s coming from. Scammers might send you a check for a huge amount and then ask you to send some of it back. If that check turns out to be fake and you’ve already sent real money, you’ll be out a lot of cash.
Look out for yourself by always double-checking that the payor is legit before sending any money back. And as a rule of thumb, if the story involves a prince or long-lost relative, it’s probably best to be extra skeptical.
Cash Your Check
So, remember: Be prepared with proper identification when you cash your check, stay compliant with the IRS by always reporting your large transactions, and always look out for potential scams.
Just search for “check cashing places close to me,” and you’ll be one step closer to accessing your cash. Now that you’re armed with all this knowledge, you’re ready to cash that check and make it rain—legally, of course. Go ahead and enjoy your funds with confidence, knowing you’ve got everything covered.