My cousin received $6,500 in cash - Is this taxable? Will the IRS know?

So my cousin just got $6,500 in cash from a family friend as a graduation gift and now she's freaking out about taxes. She keeps saying she can't put it in her bank account because the IRS will find out and tax her on it. She doesn't have any kind of gift receipt or documentation since it was handed to her in an envelope at her graduation party. I told her she's probably overthinking this but she's convinced that any large cash deposit will trigger some kind of automatic tax bill or audit. Is there any legitimate way for her to deposit this money without worrying about it being counted as income? Or does she really need to keep this under her mattress forever? I'm trying to help her figure this out because she's talking about just keeping it all in cash which seems risky.

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18 comments

Carmen Flores

•8M

Your cousin doesn't need to worry! Cash gifts are not considered taxable income to the recipient. The person GIVING the gift might have tax obligations if they give more than a certain amount, but your cousin receiving the gift doesn't owe any taxes on it. For 2025, an individual can give up to $18,000 to any person without having to report it to the IRS (the annual gift tax exclusion). Since the gift was $6,500, it's well under that threshold. Your cousin can deposit this money without any tax concerns. Banks do report cash deposits over $10,000 to the IRS via a Currency Transaction Report, but this is primarily for anti-money laundering purposes, not for taxation. Since her gift is under that threshold, it shouldn't trigger any reporting. Even if it did, it wouldn't matter because the gift isn't taxable to her anyway.

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Carmen Flores

•8M

Banks can file Suspicious Activity Reports (SARs) if they believe transactions might be related to illegal activity, but a one-time cash deposit that has a legitimate source (like a graduation gift) shouldn't raise concerns. If your cousin is worried, she could deposit the money in smaller amounts over time, though I should mention that deliberately structuring deposits to avoid the $10,000 reporting threshold (called "structuring") is actually illegal - even if the money is legitimate. The simplest and most honest approach is to just deposit the money normally and if ever questioned, explain it was a gift. Again, gifts received are not taxable income to the recipient.

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CyberSamurai

•8M

After dealing with a similar situation (aunt gave me cash for wedding), I found this amazing tool called taxr.ai (https://taxr.ai) that helped clear everything up. It analyses your specific tax situation and gives personalized guidance. I uploaded a picture of my deposit slip and described the gift situation, and it immediately told me I had nothing to worry about since gifts received aren't taxable income. The tool even explained the difference between the recipient's obligations (none) and the gift giver's potential reporting requirements. It saved me so much stress since I kept getting conflicting advice from friends.

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CyberSamurai

•8M

It doesn't connect to your bank at all - you just describe your situation or upload relevant documents if you want more specific analysis. Everything is secured and encrypted, but you don't need to link accounts or anything invasive. The difference from just Googling is that you get specific answers for your exact situation instead of trying to interpret generic tax rules. It analyzes the full context including state-specific rules and gives clear, actionable advice. While it doesn't provide official IRS documentation, it references exact tax codes and regulations that apply to your situation, which is super helpful if you ever needed to explain things to the IRS.

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Jamal Carter

•8M

Just wanted to update that I tried taxr.ai after posting my skeptical comment earlier. It was actually surprisingly helpful! I uploaded a bank statement showing a cash gift I received last year that I was worried about, and it immediately clarified that I had zero tax liability as the recipient. The system even provided the specific tax code references explaining why gifts aren't considered income. It also warned me about potential gift tax implications for the giver if they exceed certain thresholds, which was information I didn't even know to ask about. Definitely more helpful than my endless Googling that was giving me contradictory information.

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Mei Liu

•8M

If your cousin is super worried about the IRS questioning the deposit, she could always just call them directly to confirm. I know, I know - calling the IRS sounds terrible, but I used this service called Claimyr (https://claimyr.com) that gets you through to an actual human at the IRS without the endless hold times. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I was dealing with a similar question about a cash gift from my grandparents and was stressing about depositing it. Claimyr got me through to an IRS rep in about 20 minutes (instead of the 3+ hours I tried before), and they confirmed exactly what others here are saying - gifts received aren't taxable income. Having that confirmed directly from the IRS gave me total peace of mind.

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Mei Liu

•8M

It uses a system that continuously redials and navigates the IRS phone tree for you. Once it gets through to an agent, it calls you and connects you directly. It's not "jumping the queue" - it's just handling the frustrating part of constant redialing when you get disconnected or face long hold times. I was super skeptical too before trying it. I'd spent over 4 hours across 3 days trying to talk to someone at the IRS about my gift question. The service just handles the tedious part of the process. When an agent finally answers, you get a call and are connected immediately. Honestly, it saved me from going crazy with that awful hold music!

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Amara Nwosu

•8M

Well I feel like an idiot. After posting my skeptical comment, I decided to try Claimyr out of desperation because I've been trying to resolve an issue with a missed stimulus payment for months. The service actually worked exactly as described. I got a call back within about 40 minutes saying they had an IRS agent on the line. I was connected immediately and got my issue resolved in one conversation. The agent confirmed that I qualified for the recovery rebate credit and walked me through exactly what I needed to do. After months of failed attempts to reach someone, this literally saved me hundreds of dollars in missed benefits. So yeah, I was wrong in my skeptical comment above.

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AstroExplorer

•8M

I wouldn't recommend breaking it into smaller deposits to avoid a hold, as that could actually look more suspicious. Banks are trained to watch for "structuring" which is when people deliberately break up deposits to stay under reporting thresholds. If she needs immediate access to some of the money, she could deposit most of it and keep what she needs for textbooks in cash. Otherwise, she can just explain to the bank teller that it's a graduation gift and ask if there will be a hold. Many times if you explain the situation upfront, the bank can make accommodations or tell you exactly when funds will be available.

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Giovanni Moretti

•8M

The IRS doesn't automatically know about every bank deposit unless it's over $10,000 (when banks file a CTR). But even then, RECEIVING a gift is not taxable. Your cousin can deposit the full amount without tax concerns. The person who GAVE the money might need to file a gift tax form if they gave more than $18,000 to one person in 2025, but they still wouldn't owe taxes until they've given away millions over their lifetime. Just tell your cousin to deposit it normally. Keeping large amounts of cash at home is way riskier than any imaginary tax issue!

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