I've borrowed money from a family member for medical expenses. I'm worried that we're going to get audited because there's a lot of money moving between our bank accounts as he sends me money and I slowly pay it back. I know we don't owe taxes on private loans, but how should I prepare for the audit that I fear is coming? Should we write something up explaining how much was loaned and what has been paid back? How do I do this without making it look fishy?
Part 2: The family member I borrowed money from is renting a house from me. We have agreed that any amount less than the rent is to be applied towards what I owe. So, if rent is $1,000/month and he gives me $600 one month, I am claiming $1,000 as income and paying taxes on that, but he is taking $400 off what I owe him. Or, if he gives me zero dollars one month, I'm still claiming $1,000 as income and paying taxes on that, but he is taking $1,000 off what I owe him. We are both fine with this arrangement, but I'm worried about that looming audit. How should I prepare? Should I write something up explaining this? A spreadsheet, perhaps, showing what money was applied to what debt?
I want to be as transparent and prepared as possible. Any help would be appreciated. Thank you.
You'll need to sign in or create an account to connect with an expert.
You really need to seek guidance from local legal counsel specializing in taxation for your scenario.
You really need to seek guidance from local legal counsel specializing in taxation for your scenario.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Expat Online Teacher
New Member
reljjl1
Returning Member
mm330
Level 1
TomG6
Returning Member
user99e7f063
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.