01-11-2013, 02:34 AM
to protect both of you IRS-wise: write up loan paperwork at a minimum interest rate. then, if you truly don't want the interest you can gift it back to your friend.
if you don't set a rate and the gov gets involved they may tax you for the interest you SHOULD have made. you can google how to determine the lowest rate possible. given how piss poor savings rates are you could probably set the rate pretty darn low.
i've done a number of projects in my life with person to person loans with friends and supporters. they were all paid back in full. some were simply forgiven after a few years of payments and were low enough to be under the gift threshold. but i always did paperwork in case the IRS came a calling.
if you don't set a rate and the gov gets involved they may tax you for the interest you SHOULD have made. you can google how to determine the lowest rate possible. given how piss poor savings rates are you could probably set the rate pretty darn low.
i've done a number of projects in my life with person to person loans with friends and supporters. they were all paid back in full. some were simply forgiven after a few years of payments and were low enough to be under the gift threshold. but i always did paperwork in case the IRS came a calling.