a friend is paying me back a 200,000 loan by wiring the 200,000 into my savings account. Will I be charged tax. I live in NYC . All this money was originally given to me by relatives and sitting uninvested in my brokerage account . Do I need to pay taxes to but it back into my savings account?
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2Did you charge interest? Is the money coming from outside the United States?– mhoran_psprepJul 31, 2022 at 1:10
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1Do you have any documentation that this was a loan?– Dilip SarwateJul 31, 2022 at 1:59
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1 Answer
Tax is not payable on a repayment of loan principal, I.e. receiving back what you loaned to someone. It is payable on any interest or similar paid over and above what you were loaned. This assumes the money you loaned was yours.
Given the amounts you should have thorough documentation of the amount loaned and repaid and when this occurred, in case of audit.
If the transfer is international make sure you comply with money laundering rules.
answered Jul 31, 2022 at 2:22
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1And the tax office will likely be curious where that money comes from. It might be money that legally counts as income. Jul 31, 2022 at 14:03
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@gnasher729 How could repayment of a loan count as income? If you believe it might then please write it in answer. Jul 31, 2022 at 22:26
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@DJClayworth the burden of proof that it was a loan repayment is on the receiver. Does the OP have any documentation that it was in fact a loan? Was there ever interest paid? Is there a note? Aug 1, 2022 at 1:15
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