Are payments that someone makes to me considered additional income?

Question

I made a loan to a person and they are paying me back . This was for a loan to help them purchase property. My question is this. Are the payments I recieve considered additional income that I have to pay taxes on. I paid tax on the money once and loaned it out. There is no interest involved but if they pay me back $40,000 all at once when they get their loan, is my money I loaned them considered additional income that I have to pay taxes on again?

Answer 1

If you loan money to an individual with out any interest there is no tax involved nor would you be able to take a loss if they never paid you back. If you receive interest from such a loan you would report the interest portion on line 8a of your 1040 return.

Answer 2

Loan re-payments are NOT income

Interest or fees charged, would be income.

If you are expecting a $40,000 check all at once, do yourself a huge favor and write up a loan document, have the borrower/repayer sign it when they give you the check. Does not have to be fancy, but you may need it to prove the money was not from taxable income, or illegal gains. The bank very well may report a $40,000 deposit, even if it is not cash. War on terror, war on drugs and other such nonsense has turned many of our fellow citizens into narcs for the government.

If you would like a quick example of a letter that would cover your butt, drop me a line and I will shoot one off for you.

Not offering legal or tax advice to you, but am trying to help you keep from having your money confiscated for no good reason, and contrary to popular belief it happens all the time in this supposed "free" country.

Peace

Answer 3

No, you don't report or pay tax on the money you receive because someone is repaying a loan you made to them. If you were getting interest on it, then the interest part would be taxable, but not the repayment of the money you lent them.

Answer 4

Why would it be considered an additional income when you already had the money and loaned it to someone and now your getting it back? You should not have to pay taxes on money that had already has been taxed and was already yours. It's something you loaned to someone and now they are returning it to you.

Answer 5

As far as I know, only interest that is paid to you would actually count as additional income...and since there is none in this case, I would hazard a guess and say NO.

You may want to check with an expert.
There could be some other taxes involved or at the very least
some extra paperwork.

Answer 6

Absolutely not. The IRS, in general, defines income as any "gain", be it a gain in money, property, assets, or anything having a tangible value. If you lent $40k, and received $40k back, you've gained nothing. If you charge interest, or any type of compensation for the loan, say a one time $2000 fee or charge, you would owe taxes on the gain, or $2000, but not the $40k.

Answer 7

No, BUT YOU ARE REQUIRED TO PAY TAX ON THE "IMPUTED INTEREST" (INTEREST INCOME THAT YOU WOULD HAVE RECEIVED IF YOU HAD CHARGED INTEREST). There are a few exceptions to this rule. For example, there is a limited amount that section 7872(g) of the Internal Revenue Code permits a taxpayer to lend to a qualified continuing care facility without incurring imputed interest.

Answer 8

well, it is always dangerous to make a legal opinion but according to my understanding, the repaid principal from a loan would not be considered "new" income, only the interest portion of each payment (which you claim is zero but you better be able to prove that if the irs comes calling)

Answer 9

Repayment of the loan is not income.

Answer 10

You're receiving no extra income so no.
Whatever they repay is part of what you originally had
and already paid taxes on...
(and since interest is not involved here.)..nothing above
and beyond your own(original) money.