Family Loan

[felyasocal]

Sorry if posting in the wrong section!

I am kind of confused about this. I am going to borrow a substatial amount of money from a family member to pay off my credit cards. 

How does that work? Do they just give me the money and that's it? I pay them back and forget about it? Or are the taxes or % involved? 

Its more than 10K so as far as I understand the bank has to report it.

Very confused so if someone could explain, I would really appreciate. I don't understand how exchanging money between family members is any business of the IRS. I guess i come from a different part of the world where people are not **bleep** by the tax man!

Thank you!

[BrianKill]

There is no IRS involvement in family loans.  Normally you would just sign a promisorry note to the person or people lending you the money.  You can find one on LegalZoom.com.

The $10,000 rule only applies to (green) cash transactions of $10,000 ore more (going to the bank and withdrawing 10K in green bills).  There is no reporting when transfer are by check, bank transfer, etc.

Sometimes people offer security to back up a loan, but it doesn't sound like you will be doing that.

That's all there is to it.  It's easy.  

[felyasocal]

Its basically going to be a transfer of an amount, more than 10K, from one account to another. So I should not have any problems there?

[StartingOver10]

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@felyasocal wrote:

Its basically going to be a transfer of an amount, more than 10K, from one account to another. So I should not have any problems there?

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No, but you will want to have an agreement in writing and keep good records. It is the only way to make sure that there is no misunderstanding of the payment due date, the amount to be paid and interest due, if any. Even if the loan is no interest, make sure you have a written agreement with all the details of the agreement between you (the borrower) and your family member that is the lender.

Sounds like you have a very generous family memeber. I hope this loan will help you get back on your feet.

[iv]

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@BrianKill wrote:

The $10,000 rule only applies to (green) cash transactions of $10,000 ore more (going to the bank and withdrawing 10K in green bills).  There is no reporting when transfer are by check, bank transfer, etc.

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No mandatory CTR, but the bank could decide to file a SAR...

[Anonymous]

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@iv wrote:

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@BrianKill wrote:

The $10,000 rule only applies to (green) cash transactions of $10,000 ore more (going to the bank and withdrawing 10K in green bills).  There is no reporting when transfer are by check, bank transfer, etc.

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No mandatory CTR, but the bank could decide to file a SAR...

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What does 'CTR' and 'SAR' mean?

[iv]

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@Anonymous wrote:

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@iv wrote:

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@BrianKill wrote:

The $10,000 rule only applies to (green) cash transactions of $10,000 ore more (going to the bank and withdrawing 10K in green bills).  There is no reporting when transfer are by check, bank transfer, etc.

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No mandatory CTR, but the bank could decide to file a SAR...

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What does 'CTR' and 'SAR' mean?

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The US Treasury Department has a bureau called FinCEN - the Financial Crimes Enforcement Network.

Two of the reporting requirements that they enforce on banking institutions are the Currency Transaction Report (total cash transactions of $10k or more in a day) and the Suspicious Activity Report (the bank thinks something is not quite right about a transaction).