I'm about to recieve a settement and am able to pay her back some of what she has given to me. She is in a 46% tax bracket. Sne would have to give half of it to gov. She paid income tax when she earned it, she shouldn't have to pay twice should she?
2007-06-26 14:55:44 · 8 answers · asked by lullabyelady 2 in Business & Finance ➔ Taxes ➔ United States
Judy
I'm not sure how, she works in hollywood and make"star" type money, she said she pays 46% tax. I got the looks he got the brain. HaHa
Thank you for you answer
2007-06-26 15:13:24 · update #1
She got the brain
2007-06-26 15:14:26 · update #2
If it is just between the two of you and t is a mutual or cash arrangement, then no, it is not a form of income. Therefore non taxable.
You would only pay taxes if you were dealing with a bank, an accountant or a solicitor. And even then, they would say the same - but you would have to pay them!
2007-06-26 15:09:42 · answer #1 · answered by Duggan 3 · 0⤊ 4⤋
Repayment of the principal on a loan has no tax consequences for either party. She would not pay any tax on it at all.
2007-06-27 00:53:55 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
No, repayment of a loan is not income to the person receiving it.
Side question - if NY's top rate is 6.85%, and the top federal rate is 35%, how does she get in a 46% bracket?
For purposes of your question, of course, it doesn't matter, since the amount you repay her isn't taxable for her anyway.
2007-06-26 14:58:07 · answer #3 · answered by Judy 7 · 2⤊ 1⤋
No. She will not have to pay income tax on the principal. Are you paying her interest? If you are,she will pay taxes on that.
2007-06-26 23:43:53 · answer #4 · answered by Anonymous · 1⤊ 0⤋
There is no tax on the amount you repay unless it includes interest. Then she would pay tax only on the interest.
2007-06-26 15:00:06 · answer #5 · answered by Brian G 6 · 2⤊ 1⤋
She'll have to pay capital gains on Only any interest you are paying her upon the loan. (additional money you pay her that is more than the original amount of the loan)
If there was no interest on the loan then she has no tax burden upon it at all.
2007-06-26 15:00:23 · answer #6 · answered by special-chemical-x 6 · 1⤊ 4⤋
it's a private loan so it's not reported as her income any more than she deducted that private loan as an expense.
2007-06-26 15:00:07 · answer #7 · answered by Anonymous · 1⤊ 3⤋
just make sure the check that you give her is less than $10,000 , if need be split in into different checks, different dates.
2007-06-26 15:01:42 · answer #8 · answered by barrbou214 6 · 1⤊ 2⤋