My mom spends thousands on Facebook shopping but doesn’t tell my dad. I pay on credit and she pays me back. Will the bank warn the IRS?

Dear Quinten,

My mother does a lot of shopping on Facebook, with Zelle, CashApp, Venmo or Paypal PYPL,
-1.65%.
She’s not the most technologically literate person, and she doesn’t want to bother my stepdad every time she wants to pay for things. So now I use my checking account to send money to these sellers through Zelle.

I send between $500 and $5,000 per month. She then gives me cash to pay me back when I visit her. I also charged two of her credit cards from my checking account which automatically pays each month to repay.

I’ve also given her permission to use my cards so she doesn’t always have to pay cash when she goes to the store, and in return I get membership rewards and cash back, and I’ll let her know how much she spent, and she will refund me in cash.

I constantly send payments in Zelle and deposit cash into my bank account every week. Will the bank report the cash deposits to the Internal Revenue Service and will the IRS think I’m not reporting additional income? Or will they suspect me of something illegal because of all the activities?

Complex financial administration

You can email The Moneyist with financial and ethical questions related to the coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell at Twitter.

Dear Complex,

Usually, if the deposits are less than $10,000 a month, the bank does not warn the IRS. However, the financial services industry and the Biden administration disagree on reducing this to as little as $600. A bank’s system can be alerted to your account if it detects unusual activity and sends you a message.

However, there is unusual activity going on. First, your mom spends a lot of time on social media shopping sites buying things for $5,000 a month. Second, she doesn’t want to bother her husband with it. Third, she has dragged you into these complex social media escapades, and you get something out of it too (reward points).

It’s time to ask your mom what she buys, why she needs it, and what divine hole these purchases fill in her life. And yes, it’s time for you to sit down with your dad and explain what’s going on. If your mom didn’t have a shopping addiction — or the beginnings of it — she wouldn’t have kept it a secret in the first place and wouldn’t mind if you told your dad.

Your mom isn’t the only one sitting at home spending money on social media during the pandemic. “Social media has transformed from a place of sharing to a place of discovery and even shopping, especially when it comes to fashion,” said one NPD Group Report released last June. The research firm found that 51% of those surveyed said they make purchases on Facebook FB,
-1.62%
or Instagram.

You are right to ask about unusual activities with your bank account. But the bigger question concerns your mother’s shopping activities. Whether you realize it or not, you enable your mother’s lavish spending. Even if your parents are extremely wealthy, the secrecy of this arrangement should ring alarm bells with you long before they set off red lights at your bank or the IRS.

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