Daily Archives: February 27, 2020

How exactly to provide cash to a family member without getting whacked by the IRS

How exactly to provide cash to a family member without getting whacked by the IRS

You wish to loan money to a cash-strapped member of the family? That’s a fantastic belief, but be sure to simply take my advice and also make the tax-smart means.

Here’s just how to accomplish that:

Charge IRS-approved rate of interest

You may face unfavorable and complicated tax rules, as I’ll explain later if you make a loan to a family member and charge zero interest. But you can avoid all of the income tax problems in the event that you alternatively charge mortgage loan that at the least equals the IRS-approved relevant rate that is federalAFR). Because AFRs are nearly unbelievably low at this time, you will be good to yourself by asking the AFR while still being plenty good to your borrowing household member also.