Having Lent My Father Money
My question involves collection proceedings in the State of: California
Hello. A couple years ago i lent my dad $11,000. He agreed to pay me 8% interest per a year. Soon he will pay me back and the amount he now owes me is little over $13,250. At the time I did not feel the need to write down on any official document that he owed me money or anything. But it has recently occurred to me that when he pays me back this money since it exceeds the $11,000 gifting amount and its not like an official loan it may be subject to gifting tax or other taxes. how do I make it legally clear that he is not gifting me the money but he is instead paying back the money. Also if is anything else you think I should know it would be appreciated. Also information relating to how this will affect how i pay my income tax this year that would be appreciated. i also i heard that if you deposit more then $10,000 in a bank account the bank is required to report it to the irs. Is this amount correct? Is there anything else they report? Should I have my father pay me back in cash? or will doing that lead to other problems?
Thank you very much for you help. Your time is appreciated:)
Re: Having Lent My Father Money
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anon123456
My question involves collection proceedings in the State of: California
Hello. A couple years ago i lent my dad $11,000. He agreed to pay me 8% interest per a year. Soon he will pay me back and the amount he now owes me is little over $13,250. At the time I did not feel the need to write down on any official document that he owed me money or anything. But it has recently occurred to me that when he pays me back this money since it exceeds the $11,000 gifting amount and its not like an official loan it may be subject to gifting tax or other taxes. how do I make it legally clear that he is not gifting me the money but he is instead paying back the money. Also if is anything else you think I should know it would be appreciated. Also information relating to how this will affect how i pay my income tax this year that would be appreciated. i also i heard that if you deposit more then $10,000 in a bank account the bank is required to report it to the irs. Is this amount correct? Is there anything else they report? Should I have my father pay me back in cash? or will doing that lead to other problems?
Thank you very much for you help. Your time is appreciated:)
You don't have to worry about "receiving" a gift. Even if it were a gift, the donor is responsible for tax.
Also you can deposit whatever amount of cash you want in your account. However, if you deposit cash, the bank will ask you for your SSN. Unless you are selling drugs or money laundering you do as mandated and go on with your life.
Definitely seek the advice of a tax professional if he pays you anything over and above the $11,000 you lent him.