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75

Loaning money to close relations tends to end poorly. You are better off not loaning your older child money. This solves all your issues except for one. You mention that your cash savings are earning "almost nothing". Is this an emergency fund, or money that can be invested? If it is an emergency fund, you have yet another argument against paying off ...


46

Would a rose smell as sweet if you called it a stench blossom? Excerpt on gifts from an LBMC article: The payment must be in the nature of “something for nothing.” It is not a gift if the payment is a reward for services rendered. With regard to payments made by an individual to a service provider, it is difficult to argue that such payments ...


37

No logistics, just sign the title. Gifts under $14K (as of 2015) (total per year per person you give gifts to) are tax exempt. If you're not going to give any more cars to your sister this year - you're good to go.


35

Your heart is in the right place. Especially since they've got a kid. If you really want to help them, have the uncomfortable conversation with them that they need to have about money. Specifically, how to develop and stick to a budget. It is a painful, but valuable lesson for life. Depending on what type of relationship you have with them, you can ...


28

Your daughter can give you (and also as many other persons as she likes, for that matter) $14K or less each year as a gift without needing to file a Federal gift tax return. She does not have to report the money anywhere on her Federal income tax return or anywhere else. In particular, she does not get to deduct that money in arriving at what is called the ...


28

Gifts are not taxable income to the recipient. In the US, gift tax is paid by the giver, not the recipient. However, there is an annual gift exclusion amount (currently $15,000/year). Any gifts under that amount are not taxable and don't need to be reported to the IRS. This limit is per person, so your parents could give you up to $30,000 and have no ...


27

I tend to follow the Keep It Simple, Stupid principle. Next year at the same time when I give my college student daughter some money for a car, I'm going to give her brother an equal amount of money. (I'll suggest that he add it to his own Car Down Payment Fund -- or if he buys a car by then -- apply it to the loan principal, but it'll be a gift and he can ...


20

Q: If I call a tail a leg, then how many legs does a dog have? A: 4. You can call it whatever you want, it's still a tail. The scenario is nonsense. There is a quid pro quo, the waitress served the customer and he tipped her. A $7 tip on a $24.47 check. He was generous, but misguided if he thought that this note would let the tip go untaxed. And even ...


16

While there are no direct tax issues when a US citizen gifts another US citizen under the 14,000 threshold in a year, but there may be some other issues to be considered. You do not have a job this year. Are there any benefit programs that you participate in that would be impacted by accepting a gift of this size? Is gifting cash to you the best way to ...


15

I like THEAO's answer above but I would make some changes. Treat this as a gift; not a loan. Having to ask your friend for repayments is likely to become a huge strain on the friendship. Giving them money, whether you decide to do it as a gift or a loan, does not entitle you to then dictate their life. Sitting down with friends and going over their ...


15

If you want to be fair then be fair. It sounds like you wish to gift this money so offer it as a gift. Hi kids, I have an extra £xyz lying around so I would like to give each of you half. If this is truly a "no strings attached" gesture then I would like to add that you are a very generous parent. If this is a dirt-cheap write-off loan you wish to offer ...


13

Gift receipts have come into fashion in the last couple of decades. Some stores allow returns of items that they carry without receipts, but often only for store credit. Others require receipts for any return. Gift receipts are a recognition the consumer reality of gift giving and they allow the giver to spend an amount that they are comfortable with, show ...


13

The simple answer is "don't do it." He should take the check, open a bank account, and after it clears, he'll have his money. I'm not suggesting that this is some kind of scam. I'm sure that every day lots of unbanked people get $10,000 checks and friends are happy to clear those checks. But on the rare chance the sender of that check is untrustworthy, or ...


13

The short answer is "no". Gifts below $14K are not subject to any reporting requirements (assuming you are in the US). The long answer is a series of questions: Is this person well-known to you? Why aren't they using the money to open their own bank account? Do they want you to give them cash right away, or are they willing to wait until the check clears? ...


12

IMHO these people need to understand finance. I think Dave Ramsey is the best for this kind of situation. They need their butts kicked. What kind of parent spends money on playing cards when they have a child and not a place of their own? Answer: Parents that needs to grow up. Most of all they probably have an income problem. I would assume that the ...


12

can promise the same cash amount later, but how do I financially value the benefit my son gets now? I suppose your question is outlined above. You want to give money X Amount to your son now and same amount X to your daughter, but later, and wondering if that is fair. In a positive interest rate environment "dollar today is worth more than a dollar ...


8

The key for your friends is a robust and detailed form of budgeting. There are plenty of website resources to help them through that process and you should steer them there rather than go through it with them yourself. Of course you should show willing to answer questions and help if asked. The budgeting exercise will require quite some effort and diligence ...


8

This depends on the country(ies) involved. US citizen/resident giving gifts is required to pay a gift tax. The recipient of the gift, however, pays nothing. The value of the gift at the time of the gift-giving is used to determine the tax, and an exclusion of $14000 per person per year (as of 2013) is available to allow smaller gifts to be given without too ...


8

Banks worry that the large gift might be a loan that is ultimately expected to be repaid. If so, that affects the cash flow of the recipient, and makes it more difficult to make the mortgage payments to the bank. In some cases, of course, it is an informal loan: Dad advances a large $X to son to use as a downpayent, but does not charge interest and the ...


8

I worked in the service industry for over 10 years and this came up every now and again. Mostly in hypothetical situations. I'm not a tax expert, but my general understanding is that it is viewed as income by the IRS if you performed a service of any kind in exchange for the money. In other words, if you waited on the table, and they left you a gift for ...


8

The reason this is so confusing is that 3 different forces are acting on this mess at once. Giving a gift to one child (and not the other) Lending money to one child (and not the other) Investing your own money for a viable return I get where you are trying to create synergy here, but this is creating an overload. In our culture, dealings with money ...


7

It should be noted that "gift receipts" are printed separately, and serve as proof of purchase without saying what the purchase price was (since, like leaving the price sticker on the gift, that's considered bad form; people should value the gift for itself, rather than by its price.) Also, gift receipts are much more common, and much more valuable, for ...


7

Does the money lending between us need to be reported in our tax reports? No. Will he be taxed more because of lending the money to me? Yes. Will I be taxed more because of borrowing the money from him? No. How shall we report it so as to minimize our taxes? You cannot. What is reported on your tax returns is the income. A loan is not an ...


7

Yes, you can do that, but you have to have the stocks issued in your name (stocks that you're holding through your broker are issued in "street name" to your broker). If you have a physical stock certificate issued in your name - you just endorse it like you would endorse a check and transfer the ownership. If the stocks don't physically exist - you let the ...


7

One common type of account is called a Uniform Transfer to Minors Act (UTMA) account. Under this type of account, the money is held in the child's name for tax purposes, but the account is under control of a custodian until the child reaches a legal age. When you set up the account, the amount you put in is considered a gift to the child. The first ...


7

Your mother can give you $14k and your wife $14k (every year) without creating a gift-tax filing requirement, anything in excess of that and she will have to file form 709 with her tax return, but she will not have gift tax liability on her end unless her lifetime gift tax exemption (currently $5.49M) has been exhausted. As the recipients of the gift, you ...


7

There’s no need to set up a business for this. Gifts between friends are, to a first approximation, tax free; the only thing would be that if your friends then died within 7 years the gift would form part of their estate (tapered over the 7 years) for inheritance tax purposes. All the info about this side of things is covered here.


7

Highlights from an IRS.com article, "Here are 7 things you should know about the Federal gift tax": 1. Gifts to Family Members Count The gift tax and exclusion limit (below) apply whether you are making the gift to a complete stranger, a nephew, or your own children. The only person you can give a gift to that is exempt from the gift tax is your ...


6

Nothing is taxable. Neither the bequest nor the gift are taxable to you. However, form 3520 may be required. You're right to be intimidated - it is a complicated form with huge penalties for failure to comply. I suggest you have a professional EA/CPA licensed in your State and familiar with the UK-US tax treaty help you. No, not HR Block.


6

Very difficult situation, I've had similar ones. You simply cannot not help a friend. Worse, you have to be perceived as helping by the friend himself. And the friend thinks what he needs is money, not a lecture. At the same time, you can't keep feeding the friend's bad habits, as it will only make things worse in the long run One option I've resorted to (...


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