A deposit analysis is only as good as the deposit list behind it. BankXLSX converts twelve to seventy two months of statement PDFs into Excel or CSV with date, description, amount, and running balance in their own columns, so every credit is a row you can tag, total, and defend. Start free, no credit card.
Last updated July 2026
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A bank deposit analysis lists every credit that hit a set of bank accounts over a period, removes the credits that are not income, and compares what is left to the income that was reported. Total deposits minus transfers between accounts, minus redeposited returned items, minus nontaxable receipts such as loans, gifts, and capital contributions equals taxable deposits. The IRS uses the same arithmetic as the bank deposits and cash expenditures method described in IRM 4.10.4, and lenders, forensic accountants, and tax controversy practitioners use it to test whether reported revenue is complete.
The math in a deposit analysis is simple. Getting to a clean, complete list of deposits is the part that eats a week.
Three years across two accounts is roughly seventy statements. Reading credits off page images and retyping them is where both the hours and the errors come from.
A transfer from savings shows up as a deposit with a plain description. Counted twice, it inflates income and the whole analysis is wrong.
A check that bounces and is redeposited creates two credits for one payment. Both show in the deposit column and only one is revenue.
If the schedule does not tie to the printed closing balance each month, there is no way to prove no deposit was missed, which is exactly what an examiner asks.
Card processors settle net of fees and chargebacks, so the bank credit is smaller than gross sales. Comparing net deposits to gross revenue creates a variance that is not real.
A gap in the statement set does not announce itself in a PDF folder. It shows up as an unexplained income shortfall months later.
Upload the statements and get the structured rows a deposit analysis workpaper is built on.
Deposits parse as positive amounts with their date and full description, so you can filter to credits only and start tagging immediately.
Each row keeps the printed balance, so every month foots to the statement and you can show the schedule is complete.
Columns stay identical across banks, so business, personal, and savings accounts stack into a single sheet for transfer matching.
Older paper statements are usually image-only. OCR tuned for statement layouts reads them instead of returning blank rows.
Dates parse as real dates, so total deposits by month against reported revenue is a single pivot table rather than a manual tally.
256-bit encryption in transit, deletion on your schedule, and no reselling or sharing of uploaded financial data.
Nothing to install and no credit card to start.
Upload all business and personal accounts for the full period, including savings and any account that received transfers.
Tip: A deposit analysis on the business account alone misses the transfers that explain it.
Filter to credits and add a source column: revenue, transfer in, loan proceeds, redeposit, owner contribution, refund, gift, or other nontaxable.
Tip: Match every transfer in to a withdrawal of the same amount and date in another account.
Pivot taxable deposits by month and by year, then compare to the gross receipts reported on the return or the books, and explain each variance.
Tip: Document the reason for every subtraction while the statement row is still in front of you.
Anyone who has to prove what income really was, rather than accept what was reported.
Rebuild the deposit schedule before responding to an examination that uses the bank deposits method, and identify the nontaxable credits the examiner counted as income.
Reconstruct gross receipts for a client with missing books, or test completeness of revenue during a review engagement.
Quantify unreported income, hidden accounts, or diverted receipts in fraud, divorce, and shareholder disputes.
Average qualifying deposits over twelve or twenty four months for a bank statement loan and strip out transfers and non-business credits first.
Every version of this analysis, whether it is run by an IRS examiner, a forensic accountant, or an underwriter, works the same way. Start with everything that came in, remove what is not income, and see what is left.
| Line | Item | Where it comes from |
|---|---|---|
| 1 | Total deposits, all accounts | Sum of every credit on every statement in the period. |
| 2 | Less transfers between accounts | Each credit matched to an equal withdrawal in another owned account. |
| 3 | Less redeposited returned items | Bounced checks that were deposited a second time. |
| 4 | Less nontaxable receipts | Loans, gifts, inheritances, insurance proceeds, capital contributions, tax refunds. |
| 5 | Equals taxable deposits | The income that can be traced through a bank account. |
| 6 | Plus cash expenditures not deposited | Business receipts spent in cash before they ever reached the bank. |
| 7 | Equals corrected gross receipts | Compared against the gross receipts reported on the return. |
IRM 4.10.4 sets out the examiner version of these steps: analyze the deposits looking for unusual size or source, total the deposits, then reconcile nontaxable funds and transfers between accounts out of that total. The document you have to produce is the schedule behind lines 1 through 4, and that schedule is a spreadsheet of statement rows.
Most of the argument in a deposit analysis is about which bucket a credit belongs in. Tag every deposit as you go and keep a note of the support, because a subtraction you cannot evidence usually does not survive review.
| Counts as income | Does not count, if you can prove it |
|---|---|
| Customer checks, ACH receipts, and card settlements | Transfers from another account you own |
| Cash sales deposited to the bank | Loan and line of credit proceeds |
| Commission and royalty payments | Owner capital contributions and shareholder loans |
| Rents and service fees collected | Redeposited returned checks |
| Interest credited by the bank | Gifts, inheritances, and life insurance proceeds |
| Recovered bad debts previously written off | Federal and state tax refunds |
There is no official template, and the ones circulating as blank spreadsheets are useless until the deposit rows are in them. Build it in four tabs.
The reason to keep the raw tab untouched is simple. If someone challenges a number, you want to walk from the summary back to a specific statement line without rebuilding anything.
Five errors account for most of the disagreements we hear about from practitioners.
Once the deposits are rows, the follow-on work is ordinary spreadsheet work. If the engagement is an IRS collection or examination matter, the same converted data feeds the bank statement converter for tax resolution and the income and expense pages of Form 433. The deposit method is one of several indirect methods, so where assets grew faster than reported income, examiners also run the net worth method, and for a cash business they add a cash-T and markup in a cash intensive business audit. In a fraud or dispute engagement, pair it with forensic accounting bank statement analysis. Buyers testing a seller numbers should run the two sided version, the proof of cash reconciliation. Underwriters averaging deposits for a bank statement loan will want the bank statement converter for lenders, and the tagging step is faster with transaction categorization. To start from the source documents, the bank statement converter handles the PDFs and running balance extraction gives you the completeness control.
Firms running these engagements repeatedly usually automate the intake rather than the analysis. If the workpapers feed a client facing package, you can turn the reconciled figures into board-ready financial statements without rekeying, and teams handling other supporting documents at volume extract them with enterprise document OCR.
A bank deposit analysis totals every credit into a set of bank accounts over a period, subtracts transfers between accounts, redeposited returned items, and nontaxable receipts such as loans and gifts, and compares the remainder to reported income. It is used to test whether reported gross receipts are complete.
The bank deposits and cash expenditures method is an indirect method of proving income described in IRM 4.10.4. The examiner analyzes deposits for unusual size or source, totals them, reconciles out nontaxable funds and transfers between accounts, and adds business expenditures paid in cash that never reached the bank.
Use four tabs: raw converted statement rows for every account, a deposits tab filtered to credits with source category and support columns, a summary pivot laid out as total deposits less transfers less redeposits less nontaxable receipts, and a comparison tab against reported gross receipts with a variance column.
Transfers from your own accounts, loan and line of credit proceeds, owner capital contributions and shareholder loans, redeposited bounced checks, gifts, inheritances, life insurance and legal settlement proceeds, and tax refunds. Each one needs a document behind it, because the burden of proving a deposit is nontaxable normally sits with the taxpayer.
It depends on the purpose. An examination usually starts with the year under audit and may reach three years, or six where a substantial understatement is asserted. Lenders averaging deposits use twelve or twenty four months. Forensic engagements often run three to five years to establish a pattern.
It builds a rebuttable case. If taxable deposits exceed reported gross receipts and the difference has no explanation, that difference is treated as income. The way to answer it is line by line: identify each deposit the analysis misclassified and produce the loan document, transfer match, or gift evidence that reclassifies it.
Match each deposit to a withdrawal of the same amount in another account within a few days and record the reference on both rows. Converting all accounts into one workbook with identical columns makes this a sort and filter exercise instead of a page by page hunt.
No. It converts the statement PDFs into accurate Excel or CSV rows with dates, descriptions, amounts, and running balances so the schedule can be built and defended. Classifying deposits, deciding what is taxable, and reaching conclusions remain the work of the CPA, EA, or attorney on the engagement.
Income averaging for IRS Form 433 filings.
Trace concealed and diverted receipts.
The two sided version used in diligence.
Deposit averaging for underwriting.
Prove the schedule is complete.
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