My parents helped me pay off my student loan...will I have to pay taxes on the money they gave me?

Answer 1

if the amount is over $24k ($12k per parent per calendar year) then the gift is taxable to your parents and not to you. They may not have to pay tax on the amount as they can claim it towards the $1.2 million inheritence tax exclusion and it may also qualify for exclusion since it was used to pay educational expenses which are generally exempt. they need to consultant a tax advisor to figure out how to handle it.

As far as you are concerned you do not need to report it or to file any paperwork or pay any taxes.

I'm sure you have already thanked your parents so you are done.

Answer 2

You do not have to pay taxes on gifts. If your parents paid off your loans, they gave you a gift. However, there are a few caveats you will want to consider and discuss with your tax professional.

FIrst, if the amount was over $12,000 per parent, your parents may be required to file a Gift Tax form. I know how screwy that sounds, but the person giving the gift is the one who pays the tax if there is tax owed. They may or may not owe tax on what they give you, but they will need to find out. (Probably they won't, unless they've given a heck of a lot of money to people prior to this).

Second, you cannot deduct any interest they paid on your tax return, as you did not pay it. Your parents may be able to deduct that, depending on other variables, such as whether or not you were their dependent at the time.

Even if you don't have someone else do you taxes normally, this would be a good year to go in and talk with someone. I know H&R Block will give you an estimate for free, and you'll be able to make sure everything is done properly for both you and your parents. Good luck, and let me know if I can be of further assistance!

Answer 3

If they gave you the money and you paid off the loans you will have to pay taxes on anything over the 1 time $10,000 gift amount. This amount may have changed. Check with the IRS.

Answer 4

Q: What is considered a gift?

Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

Q: What can be excluded from gifts?

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.

In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

Answer 5

I believe your parents will pay the taxes if they directly pay the student loans you have had.

Answer 6

Yes, you have to pay taxes on the benefit you received from your parents.

Answer 7

i could say that it may count selection as earnings and you are able to prefer to pay tax on it, yet i don't be attentive to for specific. touch your financial employer and ask them, they're going to maximum probably be better than prepared that may assist you sturdy success!

Answer 8

Not to Uncle Sam. -But you're parents are probably going to be reminding you that they helped you- for the REST OF YOUR LIFE- and I'm not so sure that that isn't a WORSE fate... :)

Answer 9

Ask your tax adviser but I believe you do!

Answer 10

Probably not, but it would be a lot easier if they paid the bill directly.