<p>I’m curious since I have a friend who’s in a position to pay for the remainder of his tuition bill in cash: how much cash can you use without raising a red flag and/or having the school/program fill out a tax form?</p>
<p>I think I read 10k in general, so if someone needs to pay, say, 13k to their school, would it be wiser to pay 8k in cash and then take out a loan for 5k even if you can afford it all upfront? </p>
<p>I’m wondering since some people have been given very generous gifts of money for graduating high school and have maybe had “under-the-table” jobs like babysitting, working for a parent’s company as a “tool expense,” and maybe even just doing odd jobs for people. I know there’s a 10k tax-exempt limit for gifts from family, but would any amount of cash automatically qualify as that? What happens when they have money to pay for things but are wondering if they’ll have to end up paying more in taxes if using their cash? </p>
<p>I’ve paid 2.5k in cash before without a problem, but what’s the most prudent amount to spend in one place at one time? Especially to a university?</p>
<p>I don’t understand what you’re trying to avoid. Colleges aren’t in the money laundering business. They all have accountants and they bank their funds, too, so they would have to account for huge cash deposits from unknown sources. Theoretically the money could be traced back to the student in any case, if the government decided for whatever reason to look into it.</p>
<p>If you want to pay your bill in cash for your own convenience, do so (you’ll probably have to pay it in person at the bursar’s office and they probably won’t be too happy to deal with a large chunk of cash). But paying tuition in cash is no real protection against having the transaction ultimately reported to the IRS.</p>
<p>It’s up to the bursar’s office of each college to set the rules as to what forms of payment are accepted and limits of cash. Once upon a time, at banks, transaction of this sort over $9k, I believe, get reported to the IRS or whatever, but i don’t whether that is a tax law or standard operating procedure. </p>
<p>A lot of business offices won’t take more than a set amount of cash, but they often set up their own limits. The best thing to do is to call the bursar’s office and find out what the policy is at that specific office.</p>
<p>Oh, I’m not trying to avoid anything. I don’t even need to pay a lot out-of-pocket to my school.</p>
<p>I have a friend who wants to just plunk down a good sum of cash to pay for their first semester of college, and as someone who prepares others’ taxes, my dad warned him about putting down too much. He said that businesses have to fill out a 1040 form for any cash purchase exceeding 10k, and I was just wondering if that’s true and if it matters any in regards to the university. Or if people generally pay in cash or if they rely on their loans or a check or something. </p>
<p>I’ve always had most of it handled internally with scholarships and financial aid, and I once had to pay 2.5k for housing, which I did in cash. THAT wasn’t a problem, but it was no 10k</p>
<p>Large cash transactions trigger tax audits. If your friend pays 10K or over for something in cash to a legitimate business or non-profit, he is increasing the likelihood that the IRS will come calling. If he doesn’t care and is prepared for that, fine. But it’s a pain.</p>
<p>I believe certain types of transaction over a certain amount trigger certain flags. I’m sure that I’ve triggered some in my lifetime, and have never been questioned about them, but if I had been, it would not have been any big deal as they were all legitimate. </p>
<p>I don’t know why your friend doesn’t buy a bank check or a money order with a lot of cash. It’s just not a good idea in general to be carrying large amounts of cash, legitimate or not. I know folks who run businesses that require large amounts of cash to be deposited to the bank account each day, and it’s a safety issue to make that transfer. I’m talking about businesses like snack bars, small shops where the take is often cash.</p>
<p>I not sure why your friend wants to pay in cash instead using a check or cashier’s check. My family has paid for 6 years of college so far writing checks way over the gift limit and it has not ever been an issue at all.</p>
<p>I’m not sure why either. I know that he lives with his grandparents, so maybe they’re still afraid and suspicious of banks? No clue. </p>
<p>So what would be the best advice for me to give him? Tell him to just keep and add his money to the bank and write a check? </p>
<p>His attitude kind of makes me wonder if all of this money that he has is off the records or something. But that’s a separate manner that I shouldn’t get involved in.</p>