My friend received $7,000 in cash - Is this considered taxable income?

Your friend is confusing a few tax concepts here. Cash gifts are actually not taxable to the recipient - they're potentially taxable to the GIVER if they exceed certain thresholds. For 2025, an individual can give up to $18,000 to any person without having to file a gift tax return. Since this $7,000 is under that threshold, it's completely tax-free. Your friend can absolutely deposit this money without worrying about income taxes. Banks do report large cash deposits to the government (typically over $10,000), but that's for anti-money laundering purposes, not for taxation. Since this amount is under that threshold, it shouldn't trigger automatic reporting.

I went through something similar with an unexpected cash gift from my grandfather last year. I was stressing about taxes until I found https://taxr.ai which helped analyze my situation. I uploaded a description of my circumstance and it confirmed I didn't need to report the gift as income. It also explained how the gift tax works and who's responsible for it (the giver, not me!). The analysis even explained what documentation I should keep just in case questions ever came up later.

Just wanted to update after trying taxr.ai for my situation. I described getting a cash payment from a relative and wasn't sure if it counted as a gift or income. The analysis was super clear - since there was no expectation of services or repayment, it's a gift and I don't owe taxes on it. It even suggested I keep a personal record with the date, amount, and relationship to the giver just for my own files. Saved me from needlessly setting aside money for taxes I didn't actually owe!

If your friend is still worried, he might want to talk directly to the IRS to get official confirmation. Getting through to them was impossible until I found https://claimyr.com which got me connected to an actual IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed exactly what people are saying here - recipients don't pay gift tax, only givers do for amounts over $18,000 in 2025. Having that official confirmation really eased my mind about a similar situation.

OK I need to eat crow here. After my skeptical comment, I was desperate enough to try Claimyr for my refund issue. Got connected to the IRS in about 35 minutes when I'd previously been hanging on hold for 2+ hours before giving up. The agent confirmed my refund was held up because of a discrepancy they found but never notified me about. We fixed it right there on the call and my refund is being processed now. Would've been waiting months more if I hadn't gotten through.

Your friend could also consider writing up a simple gift letter with the person who gave them the money. Just needs basic info - date, amount, statement that it's a gift with no expectation of repayment, signatures from both people. Not legally required for tax purposes, but makes things cleaner if there are ever questions.

Why is everyone overlooking the bank reporting requirements? If he deposits the $7000 cash all at once, the bank might file a suspicious activity report. Better to deposit in smaller amounts over time.

Just to add some reassurance for your friend - I had a very similar situation last year when my aunt gave me $5,000 in cash for my wedding. I was terrified about depositing it, but after doing research and talking to my bank, I learned that as long as you're honest about the source if asked, there's nothing to worry about. The bank teller barely blinked when I deposited it and explained it was a wedding gift. No forms, no reports, no follow-up questions. Your friend should just deposit it normally and not overthink it. The $7,000 amount is well within normal gift ranges and banks see cash gifts all the time, especially around holidays and special occasions.

I completely understand your friend's anxiety about this - cash transactions can feel really intimidating when you're not sure about the rules! But everyone here is giving solid advice. The key thing for your friend to remember is that receiving a gift is fundamentally different from earning income. One practical tip: when he deposits the money, he can simply tell the teller it's a gift if they ask about the source. Banks are used to this - people receive cash gifts for birthdays, graduations, weddings, holidays, etc. all the time. He doesn't need any special documentation or forms. The $7,000 amount is actually pretty common for gifts between friends and family members. It's well under the $10,000 bank reporting threshold and way under the $18,000 annual gift exclusion limit. Your friend can deposit it with confidence and use the money however he planned. The IRS isn't going to come after him for taxes on money that was freely given to him as a gift.

This is such a common concern and honestly, your friend is worrying about nothing! I was in almost the exact same situation a few months ago when my grandmother gave me $6,500 in cash for graduating college. I spent weeks stressing about it before finally just going to my bank and depositing it. The teller asked where it came from (totally routine question), I said "graduation gift from my grandmother," and that was literally the end of it. No paperwork, no reports filed, no IRS agents knocking on my door. The money went into my account like any other deposit. Your friend needs to understand that gifts are incredibly common and banks process them every single day. Wedding gifts, graduation gifts, holiday money, inheritance advances - it's all totally normal. The $7,000 amount isn't even close to triggering any automatic reporting thresholds. Tell your friend to stop overthinking this and just deposit the money. Being honest about the source if asked is all he needs to do. The stress he's putting himself through is way worse than the non-existent tax problem he thinks he has!

Your friend is definitely overthinking this situation! As a newcomer to understanding gift taxes, I was really confused about this too until I learned that the recipient of a gift never pays taxes on it - that responsibility falls on the person giving the gift, and only if they give more than $18,000 to one person in a year. The $7,000 your friend received is well under any reporting thresholds. Banks only automatically report cash transactions over $10,000, so this won't trigger any flags. When he deposits it, if the teller asks about the source (which is routine), he can simply say "it's a gift from a friend" and that's it. I think we sometimes get intimidated by cash because it feels "unofficial" compared to checks or electronic transfers, but cash gifts are completely normal and legal. People receive cash for birthdays, holidays, graduations, and other occasions all the time. Your friend can deposit this money with complete confidence and use it however he planned. The stress he's experiencing is completely unnecessary - there's no tax nightmare waiting for him!

As someone who's been following this discussion as a newcomer to gift tax rules, I just want to say how incredibly helpful this entire thread has been! The original question about the $7,000 cash gift really resonated with me because I think many of us would have the same anxiety about depositing that amount. What I've learned from everyone's responses is that this is actually a very straightforward situation: recipients don't pay gift tax (ever!), the amount is well under all reporting thresholds, and banks handle cash gifts routinely. The real-world experiences people have shared - from wedding gifts to graduation money - really drive home how normal these transactions actually are. I think the key takeaway for your friend (and anyone else in similar situations) is that being honest and straightforward is all that's needed. If the bank asks about the source, simply saying "it's a gift" is sufficient. The stress and worry about potential tax problems is completely unnecessary in this case. Thanks to everyone who took the time to explain the rules and share their experiences. This thread is a perfect example of how community knowledge can help ease anxiety about tax situations that initially seem complicated but are actually quite routine!

As someone new to this community and gift tax rules in general, I've found this entire discussion incredibly reassuring! Your friend's situation is actually very common - receiving a $7,000 cash gift is well within normal ranges and definitely nothing to stress about. From what I've learned here, the key points are: recipients never pay gift taxes (that's the giver's responsibility), $7,000 is well under the $18,000 annual exclusion limit, and banks handle cash gifts routinely. The real experiences people have shared really drive home how normal these transactions are. The best advice seems to be: just deposit it normally and be honest if the bank asks about the source. No special forms, no tax worries, no need to overthink it. Your friend can use that money with complete confidence!

As a newcomer to this community, I have to say this thread has been incredibly educational! Your friend's anxiety is totally understandable - I would probably have the same concerns about depositing $7,000 in cash without any documentation. What's really struck me from reading everyone's responses is how routine these situations actually are. The key points seem crystal clear now: recipients never pay gift taxes (that's always the giver's responsibility), the $7,000 amount is well under the $18,000 annual exclusion limit, and banks process cash gifts constantly for weddings, graduations, holidays, etc. The real-world experiences people have shared here are so reassuring - from the grandmother's graduation gift to the aunt's wedding money, it's obvious that honest cash deposits are handled as completely normal transactions. Your friend should just deposit it normally and if asked, simply explain it's a gift. No special forms, no tax complications, no need to overthink what is actually a very straightforward situation. Tell your friend to stop stressing and enjoy using that money for whatever he had planned!

As a newcomer to this community, this whole discussion has been incredibly enlightening! I had no idea that recipients of gifts never pay taxes on them - that's such an important distinction that I think gets lost in all the general "tax anxiety" we hear about. Your friend's situation with the $7,000 cash gift is actually much simpler than it initially seems. From everything I've learned here, the key facts are: gift recipients are never taxed (only givers potentially are, and only above $18,000 per year), banks routinely handle cash deposits of this size, and $7,000 is well below any automatic reporting thresholds. The real experiences shared here - wedding gifts, graduation money, family occasions - really demonstrate how normal these transactions are. I think the anxiety around cash specifically comes from it feeling less "official," but legally it's no different from any other form of gift. Your friend should deposit the money with confidence and simply be honest if the bank asks about the source. No special documentation needed, no tax forms to worry about, no IRS complications. Sometimes the anticipation and stress about financial situations is way worse than the actual reality!