I saved change for years from my paychecks. How can I deposit it with out paying income tax on it again? I already paid tax on it.
By Mikey45 from Hershey, PA
Just do a change exchange. Some grocery stores have machines yu can drop change into and they give you back a dollar bill equivalent. If there isn't one in your area I would think you can wak into any bank and do the same thing. Especially if it is a bank you have an account in. Just because you have lots of change doesn't mean it will be considered income and taxed again. Worse case scenario is the bank might give you coin rolls to roll your change with before they take it.
You say you want to deposit the money so I assume you will be depositing the money into a bank account of some sort that will be paying interest. You will taxed on the additonal income the money earns, not on the deposit. That is not paying a tax twice.
If you put it into savings, you won't pay income tax on the deposit. It's not income. You will need to claim any interest you might make though and pay tax on that. Unless you've got several thousand dollars, I seriously doubt that at today's interest rates, you'll be paying much tax on the interest you make.
I think if you are able, roll your change. Look for old coins, they could be worth something more than face value. Put that money into a rainy day fund, or a vacation fund, or something you'd really like to get in the future.
It is always better to save one dollar bills and spend the change. However I don't know why you would ever need to pay tax on it. Even if you have more than ten thousand dollars you won't need to pay tax on it. Next time put your savings in the bank to begin with.
Unless you are audited, no one will question this amount deposited into your bank account. Is it thousands? You could always take photos of the change to prove that you have saved it up. If you are worried about it, why don't you convert it to paper, and then use it to purchase something that you might need like a new TV or pay your taxes or pay for some home repairs or something like that.
My advice is to take one jar of change to the bank at a time. You don't want to leave too much there to be counted by the staff, even bank personnel have sticky fingers and it takes time to count it. I just had $200 counted by the machine and it took 20 minutes. If you are over 50 I think you can put an extra $11,000 into your 401 savings plan. If you think that would help you could add the amount of your "change" into your 401 plan if you have one and not be "re-taxed" on the amount. Good luck.
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