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When you have an account with the bank you may be wondering what transactions banks report to the IRS. The majority of transactions that are reported are done to prevent crime or to report taxes to the IRS. These transactions are sent to the IRS. Usually if a transaction is being reported to the IRS, the bank will have you fill out the appropriate paperwork while you are doing the transaction. This means that you should be aware of the transaction occurring. The one exception to this is the report of interest earned throughout the year.
One common transaction that banks report to the IRS is interest that you earn from checking or savings account with you to the IRS each year. They must report this if you earn more than ten dollars a year. This is a very low number and most people earn more than this a year. The bank should send you a 1099-INT from at the end of the year, which will explain how much interest was paid to you as well as the accounts that earned the interest. When you file your taxes you will need to use that form and report the interest on your taxes.
If you cash a savings bond at a bank they must fill out a form and report that to the IRS. You will also receive a 1099-INT form from the bank about this. This information will likely be listed on the same form you receive for your savings account, but the savings bond interest is listed separately because you do not have to pay taxes on savings bonds if you used the money to pay for education expenses.
Additionally banks must report transactions that involve more than $10,000 cash to the IRS. These reports are used to spot crime. Often if a business is well established and has a large amount of cash transactions, the bank will set up an automatic form after six months. Until then if you take out $10,000.01 or deposit $10,000.01 the transaction will be reported to the IRS. This is done to catch money laundering, and does not involve your taxes. The IRS is looking for patterns and one transaction for this amount will not set off any alarms, but numerous transactions will.