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I have a friend who wants to pay me $2500/mo from his retirement…

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I have a friend who...
I have a friend who wants to pay me $2500/mo from his retirement account monthly until $250,000 is received to pay me back for a loan. His atttorney says I willl have no tax liaibility for receiving these funnds, because he will already be paying taxes each time he withdaws from his account [he is now 72). Is it true that I will have no tax liability, given that I am on social security and only receive $1130/month from the govt. at this poiint.
--Thank you!
Submitted: 8 years ago.Category: Tax
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Answered in 9 minutes by:
6/16/2010
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello matzie,

 

If this is truly a loan that he is repaying to you, then you would never have any tax consequences, as he is simply paying back money that he owes to you. The only way you would owe any tax here is if he also pays you back interest on the loan. Then the interest only would be taxable to you.

 

Even if this money is just a gift, you still have no tax consequences. If and when gift tax ever becomes due, it is paid by the donor of the gift and not by the recipient.

 

You would not owe any taxes on this money and do not need to report it on your tax return unless there is some interest involved.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you matzie

 

 

 

 

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