How to Report Lump Sum Deposits

If you receive a lump sum of cash you must report it immediately. If it was a check, you can file it with your other income.

Getting a lump sum as part of a settlement, investment, severance package or gambling winnings needs to be reported to the federal government as part of your taxes. The government requires that any lump sum deposit of over $10,000 be reported. If you have received a lump sum cash payment, you must get tax form 8300 and fill it out and send it in as soon as possible. If the payment was made in the form of a check, you can file it as income with your normal taxes.

Things You'll Need

• Form 8300 (cash only)

Instructions

1. Determine if you need to report your lump sum payment immediately. The IRS requires lump sum deposits from cash business transactions that are over $10,000 be reported within 15 business days of receiving the payment.

2. Download and fill out IRS Form 8300 if you have determined it is necessary in Step 1. Fill out all information on the form as accurately as possible to avoid problems later. When the form is finished, mail it to the IRS Detroit Computing Center, P.O. Box 32621, Detroit, MI 48232. This must be postmarked within 15 days of receiving the funds.

3. Wait to report your lump sum if it is not over $10,000 in cash, was paid to you in the form of a check or money order or if it was the result of personal income, such as annuities, settlements or investments. The government treats these lump sum payments as income, and you do not have to report them immediately.

4. Fill out IRS Form 1099-MISC along with your other standard tax forms when filling out your yearly tax returns. File this form the same way you file the others. This form is tailored for extra income including lump sum payments as a result of many different scenarios. Fill out the form as accurately as possible to avoid an audit or unnecessary work down the line.

Tips & Warnings

• Including a lump sum deposit as part of your income may bump you up into a higher tax bracket, which could cause you to owe more money to the government that you are used to. Consult a tax expert or accountant to help your prepare for this.

References

• IRS: Reporting Cash Payments of Over $10,000
• IRS: IRS Form 1099 Instructions

Resources

• IRS: IRS Form 8300