topic Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later in Get your taxes done using TurboTax

Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

slamny — Tue, 12 Nov 2024 19:21:47 GMT

I lend my daughter 200K to open a bank checking & saving account for promotion bonus, she need to put the money in the account for 3 to 4 months. In return, she will get $1500 bonus from checking. She also will get 5% interest of 200K in saving. She will get a 1099 for the $1500 bonus as well as the 5% interest from her 200K savings, and she will keep the bonus and interest and return the money back to me. I will get a $500 referal bonus which a 1099 will address to me. Since, she will give me back 200K after 3 or 4 months, do I have to file the Form 709? And, does she also has to file Form 709 when she give the money back to me?

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

DoninGA — Tue, 12 Nov 2024 20:11:25 GMT

Funds given that will be repaid are not a gift.

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

xmasbaby0 — Tue, 12 Nov 2024 20:44:46 GMT

You are not giving your daughter a gift. You are loaning money to her with the expectation that all of it is being paid back to you. She will not be giving you a gift when she re-pays the loan. So, no, there will not be a Form 709 gift tax form involved.

However, you need to be aware of imputed interest when you loan money to a family member.

https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

slamny — Wed, 13 Nov 2024 17:34:29 GMT

I read something on the web saying, "The loan must be legal and enforceable. Otherwise, it may be deemed a gift.", "If you don’t charge interest, the IRS can say the amount of interest you should have charged was a gift based on current tax rules", also "If the loan is interest-free or below the market interest rate, the IRS might consider the forgone interest as a gift, which could be subject to gift tax rules".

Then should I file the gift tax form this year or should I wait until the IRS then I file form an amend gift tax form?

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

Opus 17 — Wed, 13 Nov 2024 17:45:55 GMT

@slamny wrote:

I read something on the web saying, "The loan must be legal and enforceable. Otherwise, it may be deemed a gift.", "If you don’t charge interest, the IRS can say the amount of interest you should have charged was a gift based on current tax rules", also "If the loan is interest-free or below the market interest rate, the IRS might consider the forgone interest as a gift, which could be subject to gift tax rules".

Then should I file the gift tax form this year or should I wait until the IRS then I file form an amend gift tax form?

You have two choices.

1. It's a gift to her, then a gift back. You each file gift tax returns.

2. It's a loan. You aren't required to have any specific loan documents, but you are required to charge interest using at least the applicable federal minimum rate, and report the interest on your tax return. Even if you don't charge interest, you must report and pay tax on the interest income you would have received if you had charged interest.

The AFR for November 2024 is about 4%, so if you loan $200,000 for 4 months, you would be required to report $666 per month of taxable interest income, regardless of whether you charged her or not.

https://www.irs.gov/pub/irs-drop/rr-24-24.pdf

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

slamny — Thu, 14 Nov 2024 13:51:20 GMT

Since, my daughter putting the money into the savings account, earning 5% interest, and she will get a 1099. It doesn't make sense to do the way of lending her money and charge her with AFR 4% interest, and I also have to report that interest as revenue on my return. "Double interest earning"

I will go for the Gift option. Since, I have an liftime gift tax exclusion of $13.61 million and don't have to pay gift taxes, would I have any penalty or interest not filing Form 709 in 2024 and wait until years later or get question by the IRS? Thanks.

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

Opus 17 — Thu, 14 Nov 2024 15:54:41 GMT

@slamny

The gift tax form is due the same time as a tax return, April 15, 2025 for a gift made in 2024.

There is a penalty for filing late. It was suggested in another post that the penalty is a percentage of the tax owed, so there is no actual penalty if you are late filing a return that shows no tax. But I would not recommend deliberately ignoring tax filing deadlines unless you have professional advice.

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

slamny — Thu, 14 Nov 2024 16:03:04 GMT

Do you know Turbo Tax has Step by Step question for Gift tax category and automatically create the Form 709 or I have to download manually and fill out myself and mail it in? Thanks.

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

xmasbaby0 — Thu, 14 Nov 2024 16:05:10 GMT

TurboTax does not provide or support Form 709. You will be on your own to complete that form, or you might want to seek outside professional paid tax assistance with that form.

TurboTax does not support Form 709. It is not an income tax form and would not be included as part of an income tax return.

Here is a link to the form:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

slamny — Thu, 09 Jan 2025 16:16:10 GMT

How about, can I create a loan agreement and lend her the money with Zero interest for the first three months and charging 5% interest if she cannot repay me back after three months, instead of filing the Gift Tax Return? And, if she pay me back within the three months, then I don't have to do any on my or her tax return?

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or...

RobertB4444 — Tue, 14 Jan 2025 00:52:10 GMT

You should see an attorney and arrange a short term loan to your daughter with no interest due in the event of an early payoff etc.

An attorney can solve this for you easily,

@slamny

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

Opus 17 — Tue, 14 Jan 2025 03:36:19 GMT

@slamny wrote:

How about, can I create a loan agreement and lend her the money with Zero interest for the first three months and charging 5% interest if she cannot repay me back after three months, instead of filing the Gift Tax Return? And, if she pay me back within the three months, then I don't have to do any on my or her tax return?

I don't know if you can actually avoid the requirement of imputed interest that way. You should talk to a professional tax advisor if you want to make this more complicated than it needs to be.

https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

Re: Do I have to file Gift Tax Return if I lend my daughter money and she give it back to me 3 or 4 months later

Mike9241 — Tue, 14 Jan 2025 04:05:13 GMT

The loan is over $10,000. IRS code section 7872 requires either interest be paid or it's imputed. This means youu'll have interest income even though your daughter does not pay it. See a tax pro. Annual gift tax returns might be required depending on the amount if not paid.