Using Banks and Bank Accounts/Cash vs. Cashier's Check
I have a local buyer for a piece of jewelry I am selling for $7,500. I would feel nervous carrying a large amount of cash and was planning on meeting at their bank for a cashier's check. When I'm depositing the payment into my bank account, would cash or a cashier's check be better? I'm wondering if one or the other would put up a "red flag" of any kind? Would the amount in any form put up a red flag? I've never sold anything like this before and never have large transactions on my checking account, and I'm curious about it all. Do you happen to know if I would have to report the money from the sale on my taxes? Thanks!
This is a tricky question because it depends if this Jewelry is yours and you are just selling it to get rid of it, or did you make the jewelry or bought it from someone to make a profit as a (business.)
Online sales of personal, used items do not generally have to be reported. Selling your old bicycle on craigslist is an example of these types of sales. Income made from online sales can be reported to the IRS as "hobby income" if the sales activity qualifies as a hobby according to the IRS, i.e. sale without the intention of making money. For example, a recreational photographer selling a photo on eBay should report the sale as hobby income. One test is whether the seller has made no profit from the hobby in two of five consecutive years. If the income does qualify as a hobby income, you will have to claim it but than you can deduct hobby expenses from the income but cannot use hobby losses to offset other non-hobby income.
That should answer your question about the $7,500 deposit, if you are going to report it as a business expense no worries put it in to your account and claim it end of year. If it is non re-portable (non-business sale) you can also deposit it. Obviously bank checks are the best types of way to deposit money in to your account.
Hope that helps.