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For example, if I return US$30,000 to my parents, considering that they lent me money for my university tuition, can that be considered to be returning borrowed money, even though there were no formal written borrow agreement?

Otherwise, isn't it true that if I give to my parents, then it is considered a gift, and subject to a gift tax?

Or is the line quite blurry, such as, if they are going to use that money to fix the roof of the house, I also can just pay for the repair job myself, considering that I sometimes go home and stay there, then it wouldn't be considered a gift and subject to gift tax?

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    Note: The exclusion is 15K per donee so you could give each parent 15K, so 30K total. Leaving as a comment and not an answer because the question is more general. Just pretend it’s 50K total.
    – Damila
    Feb 6, 2021 at 4:08
  • if I bring cash home, and they spent it, then how is it counted? by the way, so I can give parents $15k each in December and then another $15k each in January? Also, what if my parents formally sign a loan agreement with me for my university tuition? Feb 6, 2021 at 7:03
  • Did your parents treat the original remittance to you (or to your university on your behalf) as a gift or a loan in their tax returns?
    – Lawrence
    Feb 6, 2021 at 15:14
  • @Lawrence. I am not sure what they did... but you know, in a family, do they make it all formal and legally correct all the time. I also wonder, if they paid $12,000 for my tuition and I think at the time the gift tax exemption was $10,000, does that mean they actually have to pay gift tax if they consider it a gift. But we never "defined" what it is, a loan or a gift Feb 6, 2021 at 15:35
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    Tuition payments made directly to the college are exempt from the gift tax.
    – chepner
    Feb 8, 2021 at 22:28

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As a comment stated, you can give each parent $15,000 per year per parent. That’s $30,000 right now and $30,000 per year as soon as the new year starts.

This requires no paperwork or any reporting the IRS.

If you do go over, there’s a form 709, and the amount goes against your lifetime exemption of $11M+. Still no actual tax due.

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  • ok, seems like if I even give $1 more, I have to report it and it is taxable... although, as some comments suggest, if it is within a family, they don't keep track of things and a few months later, nobody knows what happen, not even themselves Feb 7, 2021 at 1:56
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A verbal agreement can be a legal agreement. If it was a loan, then you can pay it back as promised.

That said, there are IRS rules for family loans. The "$100k loophole," explained in this article, may be helpful.

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