You need to loan money up to a cash-strapped family member? That’s a pleasant belief, but be sure to simply simply take my advice while making the way that is tax-smart.
Here’s how exactly to accomplish that:
Charge IRS-approved 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. You could avoid most of the income tax complications in the event that you instead charge mortgage loan that at the very least equals the IRS-approved relevant federal rate (AFR). Because AFRs are nearly unbelievably low now, you will be nice to your self by charging you the AFR while still being plenty good into the borrowing household member aswell.
Here’s just what I Am Talking About.Continue reading