My family paid off my credit card bill last year; this year I am able to pay them back and was going to just write them a check. But are there any tax penalties? The amount is more than the maximum gift allowed per year.
2007-10-06 12:54:40 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Was this a loan or not? If it was a gift, and now you want to return the gift, I suggest you split the amount into two payments, this year, and next year.
You say "family" meaning that there was more than one person, such as your parents. You can also write checks to each person, avoiding the gift tax return, even though no gift taxes would be owed assuming you have not used up your lifetime exclusion of $1 million.
If this was a loan and you are repaying the loan there are no tax implications to you. If the amount of the loan was more than $10,000 to one related person, the IRS considers some of the repayment to be interest even if no interest amount was specified. Again, writing several checks under $10K will avoid the interest issue.
2007-10-06 13:26:05 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
If it was a loan, there should have been a promissory note and interest. Both the receipt and repayment are not taxable events; the payment on interest is income to the recipient.
If a gift, then it's a gift. Split it, have your wife/husband make the other half, wait until 1/1/08 to do the rest, etc.
2007-10-06 14:02:26 · answer #2 · answered by heart_and_troll 5 · 0⤊ 0⤋
If it was a loan and you are now paying it back, there aren't any tax implications to you. There could be to them regarding interest.
2007-10-06 13:01:19 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
Is it a loan or not? The maximum gift is $12,000 per year.
2007-10-08 00:25:21 · answer #4 · answered by Gary 5 · 0⤊ 0⤋
It's not a gift. It's repayment of a loan. There are no tax ramifications.
2007-10-07 00:00:00 · answer #5 · answered by HoneySuite 5 · 0⤊ 0⤋