to help pay the bills, even though I havent been working for the past 7-8 months? Will they question where and how I got the money? I just dont want to be questioned by the IRS or have to pay a big chunk of money in taxes. Any help would be appreciated!!
2007-12-27 01:14:05 · 5 answers · asked by Karen 4 in Business & Finance ➔ Taxes ➔ United States
Also ... the money that my parents gave me was withdrawn from their retirement account, and they paid the taxes so that they wouldnt have to claim it on their taxes at the end of the year.
2007-12-27 01:24:36 · update #1
You won't need to tell the IRS about the loan unless you get audited. Once they verify that your parents gave you a loan, it won't be a problem.
2007-12-27 01:41:17 · answer #1 · answered by Steve 6 · 0⤊ 0⤋
You don't report that to the IRS - even if the loan was from the bank, you wouldn't report it. A loan isn't income.
Your parents will still have to show the withdrawal from the retirement account on their tax return at the end of the year, but since tax was withheld when they got it, they might not have to pay any additional tax. If the parent whose retirement account it was is under age 59-1/2, they'll most likely still have to pay more tax, since there's a 10% penalty for early withdrawal in addition to whatever income tax they owe.
2007-12-27 01:37:04 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
When your parents withdrew the retirement money, a portion was WITHHELD towards taxes. It was not the actual tax bill.
It's quite likely that when your parents file they will owe more money. (Usually only 10% is withheld towards taxes; most individuals are in a higher tax bracket. If they are in the 15% tax bracket, they will owe the other 5% when they file.)
Your parents MUST include the retirement money when they file. If they don't, and they owe, they will get a nasty letter in about 12-18 months from the IRS asking why the money wasn't on the form.
2007-12-27 01:56:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You do not report a personal loan on your taxes.
Your parents must report the withdrawal on their taxes however. They will receive Form 1099R which must be recorded on their tax return.
2007-12-27 02:25:39 · answer #4 · answered by ninasgramma 7 · 0⤊ 0⤋
If you tell the IRS them your parents will also have to claim that money. You don't have to tell the IRS about personal loans which is what this would be considered. I personally do not think you need to tell the IRS where you got the money. Some people stash money in safe deposit boxes, in the freezers of their house, in all these little hiding places so I wouldn't worry about it.
2007-12-27 01:21:54 · answer #5 · answered by nu_girlie 2 · 0⤊ 4⤋