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Does paying off a student loan constitute a gift for income tax purposes?

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rygwelskin

Junior Member
What is the name of your state? Michigan

My boyfriend has offered to pay $20,000 toward my student loan debt, which totals $25,000. If he pays directly to the lender, would this count as a gift and require income tax to be paid on it?What is the name of your state?
 


LdiJ

Senior Member
What is the name of your state? Michigan

My boyfriend has offered to pay $20,000 toward my student loan debt, which totals $25,000. If he pays directly to the lender, would this count as a gift and require income tax to be paid on it?What is the name of your state?
Yes, it would count as a gift. No there would be no income tax consequences. He will have to file a gift tax return, but there will be no tax due unless he has exceeded his lifetime exclusion of 1 million for gifting.
 

rygwelskin

Junior Member
Gift tax for $20,000 student loan payment?

Yes, it would count as a gift. No there would be no income tax consequences. He will have to file a gift tax return, but there will be no tax due unless he has exceeded his lifetime exclusion of 1 million for gifting.
Thanks for your response, but just to clarify? Does the $12,000 annual limit apply in this case? I have been told that any gift larger than $12,000 requires tax paid by the giver.
 

anteater

Senior Member
Does the $12,000 annual limit apply in this case?
Yes.

I have been told that any gift larger than $12,000 requires tax paid by the giver.
You have been told incorrectly. The amount of gifts to any one individual greater than $12.000 in any one year is reportable and requires filing of a gift tax return by the giver. However, as LDiJ said, there is a credit for the tax that would be due on first $1M of lifetime reportable gifts.
 

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