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My mother paid my college fees when I came to America for my master's degree. She also paid my living expenses. All of which amounts to around 40,000$. She paid me this amount between 2015 to 2016. I repaid her back 53,500$ in 2018. There was never a contract between me and my mother.

My mother lives in India and she is a citizen of India. I live in the USA. In 2018, I was a nonresident alien on a F1 visa.

Up until now, I did not think that I had to declare this anywhere on my tax forms. I filled my 2018 taxes using Sprint tax.

Now I was wondering how I should declare this and whether I owe any taxes. The accountant I hired for filling my taxes for 2019 is unable to answer my question as I was a non-resident for tax purposes in 2018.

Can the money I gave my mom be counted as a gift? Or is it considered a loan?

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As you've described it, the money you repaid your mother in excess of the money she loaned you is neither a gift, nor a loan. It is interest income to her for the loan she gave you.

Your mother needs to ask her accountant in India how to report the $13,500 in interest income you paid her. You don't have any tax consequences for paying that interest.

If it were a gift, there still would not be any reporting requirement for you as it's less than the $15,000 annual exclusion.

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  • This is wonderful. The one thing that I want to clarify though is that she didn't literally give the money at any point. She used to wire transfer the money from her account in India to my college directly. There was never a written agreement between me and my mother that I will repay the money. It was just a verbal agreement that I have to repay this amount once I graduate. – Aditya Mar 10 '20 at 10:00
  • Would this complicate things? – Aditya Mar 10 '20 at 10:12

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