Why do people withdraw and hide their money instead of keeping in their bank?

Most people don't but I'm sure there are many reasons why people would do this. I can think of one good one - if someone gets SSI (supplemental security income which is a federal welfare program) they might want to hide resources. People on SSI aren't eligible if their resources are $2000 if single or $3000 if married.

Another good reason - hiding assets from a spouse you are planning on divorcing.

As for taxes - you pay taxes on income when it is received - not money you have in bank accounts unless you receive interest or dividends.

look yes if that is so you are upset now.

Living in third world Countries it is good to have a certain amount of U.S. Or Euros or Pounds on hand. Or convertables on hand. But keep your money in more secure Countries. & keep what out of Country money you have well hid. You never know you might wake up at midnight to the rumble of incoming or read in the morning news about the coup. & need catch fast overprice transport out of the Country. But only so much money not all. U.S. dollars are best. Easy to record the serial numbers so if robbed all the money changers can be put on alert. & the police will return 25 cents on the dollar of what is recovered. But you know the thiefs are going to do hard time.

Its a grown up thing. Maybe you can figure it out in 10-15 years.

People believe banks are evil, or untrustworthy. If the majority of banks failed...money would end up worthless anyway...so stashing cash is about the dumbest thing one could do....

To this day, many do not trust or understand banking institutions. They think it safer in their possession. The amount you have in your account has nothing to do with how much you pay in taxes unless you have a high yield savings account. Taxes are determined mainly by income earned.

Most people don't. And the amount you have in the bank has nothing to do with how much tax you pay.

Sometimes they're too paranoid to trust banks and feel more comfortable having the cash with them in case of an emergency. This might include preppers who believe that a nationwide catastrophe might hit sometime in the near future, which would likely cause banks to crash. They'd have to spend it fast soon after before money becomes worthless, but it might help in a desperate situation to get them out of the country or something.

Other times, for less than legal reasons.

Once bank employees know you got money

They gossip and soon everyone knows along

With the thieves and players and con artists.

It's best to put in a safe deposit box or invest

It in stocks or real estate or something other

Than a bank account.

One does NOT pay taxes on money in the bank (except earned interest). More likely hiding the $ from a spouse or lover.

Given that checking accounts tend to pay no interest, there would be no income taxes owing on such money.

If you have cash to put in the bank, then that's after tax money.