How to Buy Car Cash Without IRS

When you pay more than $10,000 for a car, the dealership reports the transaction to IRS. Fortunately, you will discover how to buy car cash without IRS in this article.

Let’s assume you have been betting locally and have saved from your winnings to buy a car. You could simply finance the car and pay with your betting winnings. Since you did not make money from a job, you want to hide it from the IRS. However, you may be worried about the car payment, especially if you pay a lump sum.

Now, is it advisable to make multiple bank cash deposits to complete the car payment of over $10,000? Does it make the transaction look legit? Will your bank question your funds? Learn the answer from this article, and know the best practices to get rid of IRS when buying a car.

Can you buy a car straight cash?

Yes, you can buy a car with straight cash, and it keeps you from the IRS hassles. But you must not pay a lump sum when purchasing a vehicle if you must avoid the IRS. IRS mandates reporting cash payments above $10,000 received in a trade or business. Honestly, whenever you finance a car directly at the dealership, you are a cash buyer. Although it may not be your reason, the dealership considers you a cash buyer regardless of whether your check comes from a bank or a credit union.

Do car dealerships report to IRS?

Yes, a car dealership reports to the IRS when car payment exceeds $10,000. The dealership may complete Form 8300 and report the transaction to the IRS within 15 days. And when you finance a car, whether or not you intend to avoid the IRS, a dealership thinks you’re avoiding it.

How to Buy Car Cash Without IRS

This section reveals the various practices that keep your car transaction from being reported to the IRS. You need them to buy a car that costs more than $10,000 with cash and do not want to involve the IRS.

Below are the ways regarding how to buy car cash without IRS:

1. Pay in Cash

When you buy a car in cash, you enjoy a better deal than financing it. Meanwhile, I saved $2,000 recently from buying a car in cash at the dealership.

Suppose you discovered the logistics of laundering a football bet winnings; your best bet is to buy a car in cash to save money.

Also, it is not true that the IRS will return to question the source of the money. But when you can report the cash payment as income and pay taxes on the amount, you are out of trouble.

Now, let’s discuss this cash transaction. Though you will not be paying for the car monthly, you may not have to invest so much money in it. The reason is that it cuts the earning potential of your cash. So, I recommend making a large down payment to get a low monthly payment.

2. Open Two Checking Accounts

Recently, I had to buy a car in cash without the IRS worth $25,000. I contacted my CPA (Certified Public Accountant) friend to seek advice on how to avoid IRS when buying a car. The first comment he made was, “the IRS loves invading privacies; screw them!” He looked so pissed and provided me a simple method to buy a car in cash without the IRS.

After following his instructions, I noticed that I made no additional payments on the car purchase price. Let’s learn how it works!

Let’s assume you are buying a car worth $25,000, and you want the transaction without the IRS. First, open two checking accounts with two different banks, and each checking account should get $9,000.

Now, you will make the car payment to the dealership in 2 forms, including $9,000 each from both checking accounts and a separate $7,000 in cash. So, we have:

Two Checking Accounts: $9,000 + $9,000 = $18,000

Cash Payment: $7,000

Final Payment = $25,000

Of course, the IRS will not question how you got the funds to make the car purchase. Moreover, you have neither reached nor exceeded the $10k mark.

3. Finance Part of the Payment

If the car is worth $15,000, you can finance it and put down about $9,000. Now, when you have your payment book for the car transaction, pay it off in a few months. Besides, the interest will be minimal since it is a mere interest loan.

Alternatively, you can put down $7,500 (half of $15,000) and finance the remaining $7,500 with a simple interest loan over 12 months.

You may then make two more payments for the balance below $15,000 over the next two months. Since you are paying minimum interest, you stay out of the IRS.

At the dealership, tell the car dealer about your plan. The auto dealership must not mark up the rate. If the dealership marks up the rate, they will get charged back if you pay it off early. This path is beneficial, especially if you would take longer to pay off.

Is it OK to Buy a Car with Cash Without IRS Report?

It is OK to buy a car without an IRS report, but not reporting the auto transaction does not save you any hassle.

Avoiding the $10,000 cash transaction threshold is not a problem; the problem is how you explain the money when the IRS audit visits. How do you explain your finances and the source of your vehicle?

Visiting the dealership with wards of $100 bills does not impress them. The dealership sees your cash payment as another successful transaction, and cash payment is even a no-brainer for them.

In essence, instead of cash payment, put down a sizeable down payment of less than $10,000 on the car. Pay it off in 12 months with minimal interest. Moreover, as you finance the car and pay it off, it builds your credit. Also, if you reported your income legally, write the dealership a check.

Final Thoughts

Do you have a beater for the trade? On one occasion, I bought a CLK Benz for $15,000, paid $12,000, and received a $3,000 trade on it. The seller put $9,000 (cash) + $6,000 trade in the books.

In essence, I advise you to put down below $10,000, typically $9,000, with the dealership suppose the car costs $15,000. Then use any preferred payment method/structure to complete the payment. You can increase your monthly payment or lower it, depending on how long you’d be comfortable stretching paying off the balance.