I work for a company as a consultant, so I report my income on a 1096. I recently took out a loan from that company which I already signed a note saying I will pay it back in a certain number of years. Do I need to report the loan on my income tax report next year?
2007-07-29 18:18:45 · 5 answers · asked by yunimark 1 in Business & Finance ➔ Taxes ➔ United States
A personal loan does not have to be reported on your income tax. However, if you pay back a portion of the loan and then the company forgives the balance, you will need to report the forgiven balance as income.
For example, assume you enter into a loan agreement with the company for a total of $10,000 to be paid back over 3 years with an interest rate of 8%. You make payments on the loan with interest for a year and then the company tells you that you can stop paying back the loan, that the rest of loan money is yours to keep. If this happens, the balance on the loan will need to be recorded as income in the same tax year.
2007-07-30 01:56:48 · answer #1 · answered by NGC6205 7 · 1⤊ 0⤋
I believe if the company says..oh you don't have to worry about paying it back, as in a forgivable loan, THEN its income to you. Right now, its cash inflow, but is a liability to you not income.
2007-08-01 20:41:49 · answer #2 · answered by zanthus 5 · 0⤊ 0⤋
No, you don't report a loan on your tax return. If you were to default on the loan, it's possible that the defaulted amount would be taxable income to you.
2007-07-30 06:07:29 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
When the loan isn't reportable as income to you, it should be very well documented and at arms length.
2007-07-29 19:10:54 · answer #4 · answered by Anonymous · 0⤊ 1⤋
No
2007-07-29 18:26:29 · answer #5 · answered by shipwreck 7 · 0⤊ 0⤋