Money pay back wuestion

[Bugsinrugs]

My oldest son lent his younger brother $50,000 to pay off some of his student loans. At the time I didn’t have access to the cash but I do now. I don’t want money to ever become an issue between them so I’m going give him back his 50K. My question is how do I do this so there is no tax issues on his end. There must be a way to do this so the government doesn’t come calling. Thanks in advance.

[Bill Douglas]

Can you call it "a loan" so there is no tax involved.

[Bugsinrugs]

That was my thought also. I’ll have to write up a promissory note I suppose.

[Bugsinrugs]

My son is going to ask his accountant how to procede. Should have done that in the first place..

[Pazuzu]

You (meaning, any US citizen) can give any other US citizen $16k per year tax free, every year.

Do you have a wife?
YOU give son #1 $16k. Your wife gives son #1 $16K. You give son #2 $16K. Son #2 gives son #1 $16K. Son #1 receives $48K tax free.

The other $2K needs to be dealt with next year, or hand him cash.

EDIT: Sorry, it's now $18K per year, problem solved.

EDIT AGAIN: There is also a multi-million dollar gift limit per person, and you *might* be able to just give him the $50k and apply it against the $13M lifetime gift, but I'm not exactly sure how that works.

[G50]

Originally Posted by Bugsinrugs

My oldest son lent his younger brother $50,000 to pay off some of his student loans. At the time I didn’t have access to the cash but I do now. I don’t want money to ever become an issue between them so I’m going give him back his 50K. My question is how do I do this so there is no tax issues on his end. There must be a way to do this so the government doesn’t come calling. Thanks in advance.

You’re going to give the older son $50k?

Doesn’t that still make money an issue between them?

At the end, younger brother will have netted $50k, older brother $0. You will have given a $50k gift to the younger, and nothing to the older.

[Bugsinrugs]

We are all in helping younger son get out of school debt. His $50k will be a loan from me and if not paid back will be deducted from his share of our trust. Son number 1 has more money than me.

[Icemaster]

I admire you both for that commitment. Cheers.

[Tobra]

Mr Bradshaw has your answer. You and your wife gift him the money.

I plan to start retirement accounts for my grandkids that way.

[masraum]

Originally Posted by Tobra

Mr Bradshaw has your answer. You and your wife gift him the money.

I plan to start retirement accounts for my grandkids that way.

We did that.

interesting reading.
https://www.marketwatch.com/story/how-time-can-turn-3000-into-50-million-2015-12-02

[masraum]

Originally Posted by Bugsinrugs

My son is going to ask his accountant how to procede. Should have done that in the first place..

Good call. I think Paz has the best answer. Creating a loan, (whether you give it to the oldest directly, or you give it to the younger and make sure he pays off the older with it, and then not requiring payment is potentially a ticking bomb. If the govt were to find the "loan" somehow, and then discovered that you essentially "wrote off" the loan, then the recipient could have the loan amount taxed as income. None of you want that surprise. It's probably very unlikely that anyone would discover it, but would SUCK if they did.

[Bugsinrugs]

We would not write off loan. When my younger son gets established then we will re visit the situation. Luckily we don’t need the money.

[Alan A]

Look at the lifetime gift exemption. It’s a ton of $ before taxes are an issue - your accountant can explain it since I’m not typing it all in here.

[Bugsinrugs]

Originally Posted by Alan A

Look at the lifetime gift exemption. It’s a ton of $ before taxes are an issue - your accountant can explain it since I’m not typing it all in here.

Thank you!

[Arizona_928]

Originally Posted by Pazuzu

You (meaning, any US citizen) can give any other US citizen $16k per year tax free, every year.

Do you have a wife?
YOU give son #1 $16k. Your wife gives son #1 $16K. You give son #2 $16K. Son #2 gives son #1 $16K. Son #1 receives $48K tax free.

The other $2K needs to be dealt with next year, or hand him cash.

EDIT: Sorry, it's now $18K per year, problem solved.

EDIT AGAIN: There is also a multi-million dollar gift limit per person, and you *might* be able to just give him the $50k and apply it against the $13M lifetime gift, but I'm not exactly sure how that works.

As long as he reports the gift on his taxes over the bare min . It goes against that multimillion dollar cap and it’s all kosher. No extra tax liability.

[Tobra]

Originally Posted by masraum

We did that.

interesting reading.
https://www.marketwatch.com/story/how-time-can-turn-3000-into-50-million-2015-12-02

GD straight son

The power of compounding interest, how the Rothschilds took charge.

[JoeFleming86]

Originally Posted by Pazuzu

You (meaning, any US citizen) can give any other US citizen $16k per year tax free, every year.

Do you have a wife?
YOU give son #1 $16k. Your wife gives son #1 $16K. You give son #2 $16K. Son #2 gives son #1 $16K. Son #1 receives $48K tax free.

The other $2K needs to be dealt with next year, or hand him cash.

EDIT: Sorry, it's now $18K per year, problem solved.

EDIT AGAIN: There is also a multi-million dollar gift limit per person, and you *might* be able to just give him the $50k and apply it against the $13M lifetime gift, but I'm not exactly sure how that works.

I’ve been in that spot where you're juggling payments and trying to stay on top of everything. One thing I’ve learned is that having clear communication with your lender makes a big difference.
Dealing with loans can definitely be stressful, especially when unexpected things pop up and you're trying to figure out the best way to pay them off. I’ve been in that spot where you're juggling payments and trying to stay on top of everything. One thing I’ve learned is that having clear communication with your lender makes a big difference. I had some ups and downs with mine, but going through bridgecrest reviews helped me get a better idea of what to expect and how to handle certain issues. If you're unsure or feeling stuck, it’s worth checking out what others have experienced too!

[KFC911]

^^^^ Joe ... the man with a prompt wanswer ....

I reply to bots

[Pazuzu]

Originally Posted by KC911

^^^^ Joe ... the man with a prompt wanswer ....

I reply to bots

I wonder if his account was stolen, or bought. Relatively normal bland boring posting for the first few months, then no activity for 3 years, then 5 spam posts spread over the next 16 months. Usually the spammers start right out of the gate.

[cabmandone]

Edit again.. Damn spammers.