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Bounty Ended with 50 reputation awarded by Matthew
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Joe
Joe
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In order to not be considered a gift, the appropriate Applicable Federal Rate must be charged. This varies by the term of the loan; short term is 0-3 years, medium is >3-9, long is >9+.

Investopedia discusses this a bit more, particularly including the time periods.

In your case, of course check the AFR for the month in which it's lent, but it will be around 0.45% annually compounded (give or take a bit). They've been going up lately, so pay attention (or charge a bit more to be safe).

You can also read the IRS regulations here, in publication 550.

And as David's answer states, you must declare all interest as income.

In order to not be considered a gift, the appropriate Applicable Federal Rate must be charged. This varies by the term of the loan; short term is 0-3 years, medium is >3-9, long is >9+.

Investopedia discusses this a bit more, particularly including the time periods.

In your case, of course check the AFR for the month in which it's lent, but it will be around 0.45% annually compounded (give or take a bit). They've been going up lately, so pay attention (or charge a bit more to be safe).

In order to not be considered a gift, the appropriate Applicable Federal Rate must be charged. This varies by the term of the loan; short term is 0-3 years, medium is >3-9, long is >9+.

Investopedia discusses this a bit more, particularly including the time periods.

In your case, of course check the AFR for the month in which it's lent, but it will be around 0.45% annually compounded (give or take a bit). They've been going up lately, so pay attention (or charge a bit more to be safe).

You can also read the IRS regulations here, in publication 550.

And as David's answer states, you must declare all interest as income.

Source Link
Joe
Joe
  • 35.9k
  • 6
  • 90
  • 128

In order to not be considered a gift, the appropriate Applicable Federal Rate must be charged. This varies by the term of the loan; short term is 0-3 years, medium is >3-9, long is >9+.

Investopedia discusses this a bit more, particularly including the time periods.

In your case, of course check the AFR for the month in which it's lent, but it will be around 0.45% annually compounded (give or take a bit). They've been going up lately, so pay attention (or charge a bit more to be safe).