Question about parent paying student loans for you.
11-09-2009, 04:12 PM
#1
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Question about parent paying student loans for you.
Say I have $28,000 in student loans and my parents and/or grandma wants to pay those for me. I'm looking to see what problems there might be from this.
Would depositing $28K into my bank account, then writing a check for it to the lender be a problem / raise any flags?
I know there's issue with how much they can gift and all that.
To more clarify, I'm on a money market with my grandma (Polish people believe in always having more than one owner on each account), so we're both on the money market. We were thinking of just transferring the 28K into my checking account (same bank), and then me paying them off.
Anyone know off hand of the gift issues, or if all would be gravy?
Thanks in advance for any replies!!
Would depositing $28K into my bank account, then writing a check for it to the lender be a problem / raise any flags?
I know there's issue with how much they can gift and all that.
To more clarify, I'm on a money market with my grandma (Polish people believe in always having more than one owner on each account), so we're both on the money market. We were thinking of just transferring the 28K into my checking account (same bank), and then me paying them off.
Anyone know off hand of the gift issues, or if all would be gravy?
Thanks in advance for any replies!!
11-09-2009, 05:37 PM
#2
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Are you allowed to write any checks from the Money Market account?
I don't know exactly what the gift rules are, but I think anything under $10k/year is okay. You could have your grandma pay 10k now, 10k in January and have your parents pay the rest.
Are you planning on buying a house?
I don't know exactly what the gift rules are, but I think anything under $10k/year is okay. You could have your grandma pay 10k now, 10k in January and have your parents pay the rest.
Are you planning on buying a house?
11-10-2009, 01:47 PM
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Yes, we could. My thought though was, that if the gov tracks gifts, and they see a check with her name on it cashed under my student loans, then they'll want to tax that as a gift.
But we're also thinking that if the account is in both of our names, we should be good. Wish their was a clearer place to distinguish these accurately. Spoke with our accountant and he seemed sort of clueless. More of just pay it and forget it, but I'd like to know the facts.
If anyone knows...I'd love to know. Still searching the interwebs, just not getting far with this example.
But we're also thinking that if the account is in both of our names, we should be good. Wish their was a clearer place to distinguish these accurately. Spoke with our accountant and he seemed sort of clueless. More of just pay it and forget it, but I'd like to know the facts.
If anyone knows...I'd love to know. Still searching the interwebs, just not getting far with this example.
12-01-2009, 12:09 AM
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first off. get another accountant. There should be no accountant to push anything off and say pay it and forget it.
next, if the MM acct isn't held jointly and she's placed as something other than that, annual exclusion is $13k for 2009-10. Your grandma can gift you 13k in Dec 2009 and you pay 2k from your name and in Jan 2010, she can gift another $13k.
If the account is held jointly as you state, then just pay it all off from that. It's a jointly held account, once funds are deposited, you and your grandma are both owners of the account. Even if IRS rules change, I seriously doubt they would track an account of that stature and go back to see who deposited what amounts and what basis you each hold in that type of account.
http://www.irs.gov/publications/p950/ar02.html#d0e235
(excerpt)
Example 1. In 2008, you give your niece a cash gift of $8,000. It is your only gift to her this year. The gift is not a taxable gift because it is not more than the $12,000 annual exclusion.
Example 2. You pay the $15,000 college tuition of your friend directly to his college. Because the payment qualifies for the educational exclusion, the gift is not a taxable gift.
Example 3. In 2008, you give $25,000 to your 25-year-old daughter. The first $12,000 of your gift is not subject to the gift tax because of the annual exclusion. The remaining $13,000 is a taxable gift. As explained later under Applying the Unified Credit to Gift Tax, you may not have to pay the gift tax on the remaining $13,000. However, you do have to file a gift tax return.
this of course uses the 2008 limits, again 2009-2010 is $13k per year
next, if the MM acct isn't held jointly and she's placed as something other than that, annual exclusion is $13k for 2009-10. Your grandma can gift you 13k in Dec 2009 and you pay 2k from your name and in Jan 2010, she can gift another $13k.
If the account is held jointly as you state, then just pay it all off from that. It's a jointly held account, once funds are deposited, you and your grandma are both owners of the account. Even if IRS rules change, I seriously doubt they would track an account of that stature and go back to see who deposited what amounts and what basis you each hold in that type of account.
http://www.irs.gov/publications/p950/ar02.html#d0e235
(excerpt)
Example 1. In 2008, you give your niece a cash gift of $8,000. It is your only gift to her this year. The gift is not a taxable gift because it is not more than the $12,000 annual exclusion.
Example 2. You pay the $15,000 college tuition of your friend directly to his college. Because the payment qualifies for the educational exclusion, the gift is not a taxable gift.
Example 3. In 2008, you give $25,000 to your 25-year-old daughter. The first $12,000 of your gift is not subject to the gift tax because of the annual exclusion. The remaining $13,000 is a taxable gift. As explained later under Applying the Unified Credit to Gift Tax, you may not have to pay the gift tax on the remaining $13,000. However, you do have to file a gift tax return.
this of course uses the 2008 limits, again 2009-2010 is $13k per year
12-04-2009, 12:23 AM
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If you're on the MM account then how is it a gift?
Just pay direct form the MM account if you can.
Just pay direct form the MM account if you can.
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12-07-2009, 03:13 PM
#8
Chapter Leader (Southern Region)
first off. get another accountant. There should be no accountant to push anything off and say pay it and forget it.
next, if the MM acct isn't held jointly and she's placed as something other than that, annual exclusion is $13k for 2009-10. Your grandma can gift you 13k in Dec 2009 and you pay 2k from your name and in Jan 2010, she can gift another $13k.
If the account is held jointly as you state, then just pay it all off from that. It's a jointly held account, once funds are deposited, you and your grandma are both owners of the account. Even if IRS rules change, I seriously doubt they would track an account of that stature and go back to see who deposited what amounts and what basis you each hold in that type of account.
http://www.irs.gov/publications/p950/ar02.html#d0e235
(excerpt)
Example 1. In 2008, you give your niece a cash gift of $8,000. It is your only gift to her this year. The gift is not a taxable gift because it is not more than the $12,000 annual exclusion.
Example 2. You pay the $15,000 college tuition of your friend directly to his college. Because the payment qualifies for the educational exclusion, the gift is not a taxable gift.
Example 3. In 2008, you give $25,000 to your 25-year-old daughter. The first $12,000 of your gift is not subject to the gift tax because of the annual exclusion. The remaining $13,000 is a taxable gift. As explained later under Applying the Unified Credit to Gift Tax, you may not have to pay the gift tax on the remaining $13,000. However, you do have to file a gift tax return.
this of course uses the 2008 limits, again 2009-2010 is $13k per year
next, if the MM acct isn't held jointly and she's placed as something other than that, annual exclusion is $13k for 2009-10. Your grandma can gift you 13k in Dec 2009 and you pay 2k from your name and in Jan 2010, she can gift another $13k.
If the account is held jointly as you state, then just pay it all off from that. It's a jointly held account, once funds are deposited, you and your grandma are both owners of the account. Even if IRS rules change, I seriously doubt they would track an account of that stature and go back to see who deposited what amounts and what basis you each hold in that type of account.
http://www.irs.gov/publications/p950/ar02.html#d0e235
(excerpt)
Example 1. In 2008, you give your niece a cash gift of $8,000. It is your only gift to her this year. The gift is not a taxable gift because it is not more than the $12,000 annual exclusion.
Example 2. You pay the $15,000 college tuition of your friend directly to his college. Because the payment qualifies for the educational exclusion, the gift is not a taxable gift.
Example 3. In 2008, you give $25,000 to your 25-year-old daughter. The first $12,000 of your gift is not subject to the gift tax because of the annual exclusion. The remaining $13,000 is a taxable gift. As explained later under Applying the Unified Credit to Gift Tax, you may not have to pay the gift tax on the remaining $13,000. However, you do have to file a gift tax return.
this of course uses the 2008 limits, again 2009-2010 is $13k per year
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