Pay back family loan

[bebo]

Hi

I am looking to pay back a family loan. I have read that you are allowed a 13,000 gift per year.

If my wife and I both gave gifts of $13,000. Would we be allowed to pay back $26k per year.

Or another thought. If I setup a joint account with the family member, would that still be taxed?

Thanks.

Total to be repaid is in the range is undetermined yet, but will 80-90k

 

[kirby]

Your description is unclear. Do you owe a family member on the loan ? Does a family member owe on a loan and you want to give money to the family member to help pay on it?

 

[caspergreen68]

Provide us with full information so that we can serve you better.

 

[ColinCPA]

A loan is not a gift. The gift tax exemption does not apply to the family loan. Remember that your family members are required to report imputed interest on personal loans over $10,000. They must report even if you don't physically pay any interest. You should draft a promissory note to make the loan official.

As far as gifting, yes you and your wife can combine your exemptions, for a total of $28,000 for 2014. However, please understand that you will not actually owe any gift tax unless you and your wife have both used up your lifetime exemptions of $5.25 million each.

It doesn't matter if you have a joint account with the family member or not. The character of the transactions does not change.