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Started By
Message
how can I justly avoid paying taxes on this?
Posted on 6/23/13 at 2:17 pm
Posted on 6/23/13 at 2:17 pm
Let a friend borrow a couple thousand cash for bills...was pretty sure I might not get paid back ever.
Well...he finally paid me back via a company check.
I should not owe taxes on this money but it would appear to be income if I were audited...any way around this?
I will deal with it if not bc I was surprised to get paid back anyway...
Well...he finally paid me back via a company check.
I should not owe taxes on this money but it would appear to be income if I were audited...any way around this?
I will deal with it if not bc I was surprised to get paid back anyway...
7
Posted on 6/23/13 at 2:24 pm to Tiger Attorney
What a shitty friend.
Posted on 6/23/13 at 2:26 pm to Tiger Attorney
This makes no sense. Just put it in the bank and don't report it. A few thousand is nothing
Posted on 6/23/13 at 2:35 pm to Tiger Attorney
Don't sweat that. Get the friend to sign an acknowledgment that the check was repayment of a loan if you're really concerned.
Posted on 6/23/13 at 2:50 pm to Tiger Attorney
Can't you draft a quick loan agreement that shows paid in full, have him sign it, and viola... audit documentation.
Posted on 6/23/13 at 3:12 pm to Tiger Attorney
I wouldn't worry about it unless I got a 1099 in the mail in January.
Posted on 6/23/13 at 4:46 pm to Tiger Attorney
I'm not Poodlebrain, but the first question I'd ask is how frequently you get audited. Some small businesses do but if you're the average Joe it'll never happen and this isn't worth worrying about.
I'd be more worried about your friend. He is paying you via company check and therefore is probably writing off the loan as a business expense. And that's assuming he is a sole proprietor, if he isn't then he's cheating the other owners on top of that.
I'd be more worried about your friend. He is paying you via company check and therefore is probably writing off the loan as a business expense. And that's assuming he is a sole proprietor, if he isn't then he's cheating the other owners on top of that.
Posted on 6/24/13 at 1:24 am to Tiger Attorney
The simplest way to avoid paying tax on all of the money you were paid is to have the payer issue you a 1099-Int for the portion of the money that was interest. You report that amount as interest income, and the balance of the payment is not reported as income as it is the repayment of the loan principal.
If there was no interest paid on the loan, then you need to follow the rules for below market rate loans. You'll have to look them up, or consult with someone familiar with them, to see what the requirements are since they depend on the facts and circumstances of the original transaction and any subsequent payments.
If there was no interest paid on the loan, then you need to follow the rules for below market rate loans. You'll have to look them up, or consult with someone familiar with them, to see what the requirements are since they depend on the facts and circumstances of the original transaction and any subsequent payments.
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