Gifting up to $13,000/year (as of 2009) to someone is not subject to gift tax.


Assuming that the individual receiving the money is older than 25 (cannot be claimed as a dependent), what options are there if more than $13,000 needed to be given to this individual?

For example, would it be possible to loan the amount over $13,000 at a 0% interest rate to the individual? If so, how would this need to be documented for tax purposes?

  • 1
    Just a tip, you might want to use IRS.gov instead of Wikipedia for tax advice. I'd hate to risk an audit over something some guy on the Internet said.
    – JohnFx
    Aug 4, 2010 at 20:46
  • Here's the relevant page on the IRS website. Or see IRS Publication 950.
    – bstpierre
    Aug 4, 2010 at 23:47

2 Answers 2


I'm not familiar with US tax law in particular, but the general principle around the world tends to be that interest-free or low-interest loans are taxed as gifts of the difference between a commercial interest charge and the actual interest charged.

You could also forgive ($13,000 - waived interest) of the loan each year. Also, remember that there's a lifetime exemption (covering inheritance as well) of $1,000,000 which can be used for any amounts over the $13,000.

  • 1
    What exactly do you mean when you say a "commercial interest charge"?
    – Gary
    Aug 6, 2010 at 2:49
  • The amount you would be charged by someone like a bank who didn't have any personal relationship with you. Aug 6, 2010 at 9:43
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    The IRS publishes a list of what interest rates are not considered gifts. See irs.gov/app/picklist/list/federalRates.html
    – Alex B
    Aug 9, 2010 at 19:09

Does the one giving the gift have a spouse? My wife and I can gift up to $26,000 per individual by combining our gift amounts. If the recipient has a spouse, it doubles again, so long as we write the check to that spouse. Other than that, you make a loan and then forgive up to $13,000 in interest and principal each year until the loan is paid off.

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