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Banks that charge non customers check cashing fees.

Discussion in 'Taxation' started by Capwell, Sep 25, 2021.

  1. Capwell

    Capwell Law Topic Starter New Member

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    I understand that banks can charge you A fee if you don't bank with them. What i want to know is why are they not required to give you a receipt for this money transaction. Example, a noncustomer gives teller a $100 check to cash and and the noncustomer leaves with $95. Seems the bank doesn't have to pay taxes on the $5 since no receipt is given. I have asked for one and was given a deposit slip that they typed $5 for checking fees on it. What i was looking for was that i gave them a check for $100 and they gave me $95 on a receipt. They are not set up to give a receipt for these check cashing fees in form of receipts yet its all legal?
     
  2. Tax Counsel

    Tax Counsel Well-Known Member

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    The answer to that is no federal or state law requires that the bank provide you a receipt or statement for that fee.

    I don't know where you got the idea that one is only required to pay tax on income if one gets or gives some kind of receipt or statement for it. ALL taxable income received must be reported on your income tax return regardless of whether you get/give some kind of statement, receipt, etc. That bank will have its own accounting records in which that income is reflected and it is those records that the bank will use to report its income on its returns. Not issuing you a receipt doesn't in any way excuse the bank from reporting that income.

    Bear in mind that the large publicly traded banks have every incentive to report all the revenue they get to their shareholders โ€” the more revenue and more net income it reports, the higher the bank's stock price. So where the bank is going to play games, if it's going to try it, is not in keeping income off its books. Rather, they'll do it with how they handle their deductions and credits on the return, taking advantage of the differences between tax accounting and book accounting. Also, the very largest corporations are under constant audit by the IRS, making it that much harder to hide income off the books. Again, they save tax in other ways.


    Yes, it's legal because no law requires the bank to give you a receipt for it. But some banks will provide you one, so if it's important to you for whatever reason ask around the banks in your area.
     
  3. Zigner

    Zigner Well-Known Member

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    One thing I'd like to point out is that the bank DID, in fact, provide a receipt for the $5 in fees they charged.
     
  4. adjusterjack

    adjusterjack Super Moderator

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    OP wants egg in his beer.
    ;)
     
  5. army judge

    army judge Super Moderator

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    What I want to know is why you don't simply deposit the check in YOUR bank account?

    I get checks regularly from many different entities.

    Today I don't ever have to go to a brick and mortar bank.

    I pull out one of my electronic devices, open up my bank's cute lil icon, endorse the back of the check, take a photo of the check (front and back of course), and in less than 30 seconds total, the item is deposited into my account, its fully credited, and I even have immediate access to the funds.

    I don't have to leave the comfort and safety of where I may be at the moment, no crowds, no surly tellers, just me and one of my trusty, reliable devices, depositing the check(s).

    So easy this old dummy can do it.

    Plus, its FREE, no lousy five buck ripoff for me!!!
    If you did that, you'd not have to shell out five bucks.
     
  6. Capwell

    Capwell Law Topic Starter New Member

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    Thank you for the information,
     
  7. Capwell

    Capwell Law Topic Starter New Member

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    It wasn't about needing a receipt it was about since they don't give you a receipt that the $5 they charge becomes tax free for them since I would have to pay taxes on the $100 not $95. I have asked for a receipt and have gotten one every time I asked, but they were all different . Nothing that showed me giving them a $100 check to cash and receiving $95. They would be like, $5 receipt for check cashing fees on different forms of paper some typed some in writing never the same way. I thought that was odd. Sometimes I wouldn't get charged at all. If I was to pay taxes on the $100 would they also have to pay taxes on the $5 they charge?
     
  8. welkin

    welkin Active Member

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    I have trouble understanding why you care about how the bank reports it's income and how you think that affects you in any way.

    If you receiving these $100 checks because you're in business you report the $100 as gross income and you take a $5 write off as a business expense (bank charge).
     
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  9. Capwell

    Capwell Law Topic Starter New Member

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    So I don't need a receipt to do this right off?
     
  10. adjusterjack

    adjusterjack Super Moderator

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    No.

    But documentation is always better than no documentation so keep getting those $5 receipts if it's business related.

    And if it's business related why don't you have, or use, your business checking account.
     
  11. Tax Counsel

    Tax Counsel Well-Known Member

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    Yes, the bank must include the $5 fee as income on their income tax return.
     
  12. Tax Counsel

    Tax Counsel Well-Known Member

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    You need to keep accurate records of your business expenses and you should, where you can, get receipts or other third party documentation of the expense because if you get audited by the IRS the IRS may deny the deduction if you don't have that supporting documentation.
     
  13. Capwell

    Capwell Law Topic Starter New Member

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    Fare enough, Apparently I was wrong in thinking if the bank doesn't offer a receipt that they would be getting tax free money by doing so. Thanks for your time on the subject.
     
  14. zddoodah

    zddoodah Well-Known Member

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    Because no law exists requiring a receipt. That's the answer to any question of the form "why is ____ not required to do ____?" It's because there is no law that imposes such a requirement. Simple as that.

    Huh? What would make you think that not giving a receipt would have anything at all to do with paying or not paying taxes? Let's say someone gave you a receipt. What impact would that have on the bank's obligation to include your $5 in its taxable income?

    And there you have it.

    So this is just you whining that the receipt doesn't look like what you want it to look like? Boo hoo.

    Nothing you described is not legal.

    That's probably the silliest thing I've read in a while. Whether you have to pay tax on the $100 depends on whether it constitutes "income" under the applicable section of the Internal Revenue Code and has NOTHING to do with the bank giving or not giving you a receipt. Likewise, again, the bank giving or not giving you a receipt (in a particular format) has nothing to do with its obligation to include the $5 fee in its taxable income.

    Here's a concept: open your own bank account so you can just deposit the checks without incurring fees.
     
  15. Capwell

    Capwell Law Topic Starter New Member

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  16. Zigner

    Zigner Well-Known Member

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    I suspect that I'm not the only one who will have the following reaction:

    HUH?
     
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  17. army judge

    army judge Super Moderator

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    I have no thoughts about anything that has zero impact on my life, my family, or my money.




    If I had thoughts, I'm a nobody, just some old reprobate.

    No one notices me, much less listens to me.


    You need to solicit input from the "movers and shakers, the deal makers, as in the somebodies", IMPOTENT PEEPULLS duz lissen to 'em!!!


     
  18. zddoodah

    zddoodah Well-Known Member

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    That's so true that it's a pointless tautology.

    That's not true. Let's say grandma writes a check to her grandson as a birthday present. The grandson does not need to declare the $100 as income. If the check represents income to the payee (under the Internal Revenue Code), then the payee must declare it as such regardless of any check cashing transaction and regardless of whether the payee receives a receipt for any check cashing fee.

    The highlighted portion of this quote is a grammatical mess, and I'm not really sure what you're saying or who's trying to prove something. If a bank charges a $5 fee on the $100 check cashed, it will book $5 of income. It's as simple as that.

    Assuming "they" is the bank, it most certainly does need to report income. Also, it was $100 in and $95 out (unless you're suggesting the teller is pocketing the fee, which is a whole different issue).

    I'm going to be blunt here. If you are a business owner and routinely receive checks to pay for whatever products or services you sell and are cashing every check you receive at a bank where you don't have an account, you are a moron. Legitimate businesses maintain bank accounts and deposit checks into those accounts.

    As far as the IRS, you are required to file "proof" of almost nothing when filing your tax return. You only need to provide evidence if you get audited. If you claim deductions for massive amounts of bank fees without having evidence that you paid those fees (beyond your word), then yeah, you are probably going to get assessed additional taxes, etc. But this gets back to the prior paragraph. The way to avoid this quandary is to open a bank account and deposit the checks.

    Bottom line: if you choose to conduct your business in an unconventional way, then you accept the risks that come with your choices.
     
  19. cynthiag

    cynthiag Active Member

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    I have worked for a bank for 40 years. When a check cashing fee is charged, the transaction would show up on the computer as follows: $100 check received, $95 paid to the person cashing the check, $5 fee goes into an account set up to collect check cashing fees. I'm not sure why you seem to think that giving YOU a receipt would somehow hold the bank accountable for paying taxes on the fees they have collected from you. All giving you a receipt does is provide you with something for your own records to show that you paid the fee.

    And also, tellers can't just randomly decide on their own who to charge or not. If the bank has a policy that says that all non-customers must be charged a fee to cash a check, then the teller must follow the bank's policy. Occasionally a supervisor or manager may waive a fee for some reason or another, but tellers are not allowed to pick and choose which policies and rules they follow.
     
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  20. Tax Counsel

    Tax Counsel Well-Known Member

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    The bank ends up with $5 more cash when it takes the fee. It has to account for that $5 on its books, and will have to include that $5 in income on its tax return. The $5 doesn't just vanish.
     
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