Fortunately, I have a sister who is awesome enough to give me some cash. Actually it is a long term, no interest loan, and there are no formal papers to such.
The ammount is 7k.
Will I need to report this as income?
Will the ammount ‘trigger’ some sort of interest at the bank? (DEA/FBI/IRS/Homeland Security)
She has given me this because I am really really poor and I would like to keep as much of it as legally possible.
Any advice?
No, you don’t have to do anything. She can give you up to 12K in this calendar year according to the gift tax exclusion rules.
Here are the current rules:
Cash gifts up to $12,000 can be made without paying taxes.
Warning, PDF, scroll down to gift tax.
Thanks
And note that even if her gift exceeded $12,000, you’d still owe no taxes, as the gift tax (if any) is payable by the giver, not the recipient.
What about state tax?
Those usually follow federal tax laws for cash gifts. It isn’t usually an issue either.
And then only if the giver has exceeded the lifetime gift tax exclusion, currently set at $1m.
btw, the annual limit has been raised to $13,000 as of 2009.
Couldn’t this be taken out of the “gift” area entirely if it was formalized with a simple writing to memorialize it as what it actually is, a loan? That is, assuming that there really is some expectation that the OP will pay it back some day. I don’t know tax law, but I don’t have to pay taxes on my student loans, or car loans, or any other loans–presumably because it’s a net zero, the ‘income’ offset by a matching liability.
Though in this case, it doesn’t sound as if it matters, of course.