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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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A distant relative of mine is soon going to be paying me a

Customer Question

A distant relative of mine is soon going to be paying me a monthly stipend for rent, books etc while I am in school. (I am not claimed as a dependent on his tax forms).
He informed that he would send the money to me directly into my account. He gave me a direct deposit form for employers. This raised a red flag...if I sign this form for him, could it later be argued that I was employed through his company, and that this income will be perceived as taxable income for myself to pay?
Can direct deposit slips be used for anyone or are they only for employers? Are there any other direct deposit forms that I can sign that deal with gift money?
Submitted: 3 months ago.
Category: Tax
Expert:  JACUSTOMER-8nme36c9- replied 3 months ago.


There are some possible scenarios here. Please give me a moment to type them out.

Thank you,


Customer: replied 3 months ago.
I am aware that there is a possibility that my account might be flagged by the IRS for having large amounts of money deposited into it on a monthly basis. If the IRS asks me to prove where the money is coming from and I claim that it is gift money, I do not want this employer deposit form that I signed to contradict what I am saying. How would I be able to sufficiently prove that this money is gift money?
Expert:  JACUSTOMER-8nme36c9- replied 3 months ago.

It is not a good idea to receive this money the same way an employee would.

Expert:  JACUSTOMER-8nme36c9- replied 3 months ago.

He is allowed to gift you a certain amount from his personal money without incurring a gift tax. I would personally ask for checks, paypal or an electronic service like Venmo.

Customer: replied 3 months ago.
This money exceeds the $14,000 a year limit.
If I use something like Venmo, how kind of documentation or proof can I provide to the IRS that this is gift money and not money stemming from illegal activities?
Expert:  JACUSTOMER-8nme36c9- replied 3 months ago.

If there is any way he can pay the school directly that would help for some of the expenses. He may have to incur the gift tax on funds given to you directly over $14,000. You are allowed to receive money from people. They should be able to see the source of the funds and realize it is not illegal. For example, you have a check deposited from your relative.

Customer: replied 3 months ago.
I am on scholarship for school. I am taking over a full time credit load and do not have time to work, thus he is sending me money so that I have something to live on.My question pertains to the direct deposit form for employers, what would happen if I signed that? Could this make my money taxable income?
Expert:  JACUSTOMER-8nme36c9- replied 3 months ago.

No. To be an employee you must also fill out W-4 and I-9 plus application for employment. Direct deposit form is not enough to argue employment.

Customer: replied 3 months ago.
Ok thank you for your time.

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