Do banks report deposits and withdrawals to the Internal Revenue Service?

Banks generally don't report the deposits or withdrawals you make to the Internal Revenue Service, unless the transaction involves more than $10,000 in cash. The reporting requirement is intended to prevent major illegal activities from being hidden by using untraceable cash. It would be unusual for a legitimate business to make such transactions in cash.

Remember that banks and other institutions must generally report interest you earn from a savings account, checking account, certificate of deposit and the like. You must report those earnings on your income tax return, even if it's just $10.