I owe 80k in law school debt, if it gets paid off in full by a relative do I have to pay income, gift or any other type of taxes on this?
2007-05-16 10:58:27 · 4 answers · asked by jbirwin6 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
No, you would pay no taxes whatsoever. The $80,000 would be considered a gift from your relative that you immediately used to pay school expenses. Per IRS Publication 525, gifts are not taxable to the recipient upon receipt. However, your relative would probably have to file a gift tax return (they likely wouldn't owe, but would just have to report the gift).
2007-05-16 12:11:14 · answer #1 · answered by Anonymous · 1⤊ 2⤋
It would be considered a gift to you. Educational expenses paid directly to the school aren't considered taxable gifts, but if it's after the fact and they're either giving you the money or paying off your loans, then it would be. With that amount, they'd have to file a gift tax return, but might or might not owe any tax on the gift. In any case, you wouldn't pay any taxes on it. You don't pay income tax on gifts, and gift tax is paid by the giver, not the recipient, if any is due.
2007-05-16 15:43:36 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
If payment is structured so that you do not receive more than 12k a year from one person then there is no gift tax or anything involved. If the relative has a wife and other kin then 12k can be funneled through enough people to water it down to 12k or under per each (7 people).
2007-05-16 11:21:16 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
your gonna get taxed for even thinkin about it! damn it im even gonna get taxed for answerin.....
2007-05-16 11:03:47 · answer #4 · answered by loontheklown@btinternet.com 2 · 0⤊ 5⤋