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| *Loan,banking and credit>>>income tax |
Can my boyfriend pay my student loan of $20,000 without either of us having to pay income taxes? (US or Mich)? |
My boyfriend has offered to pay $20,000 of my student loan debt, which totals $25,000. If he pays directly to the lender, would either of us owe income tax for the $20,000? It would not change either of your income taxes. It would be considered a gift to you, so he might want to consider paying off $12,000 of it this year, then the other $8K next year so he doesn't have to file a gift tax return. Paying off a student loan does not reduce anyone's income taxes. If he paid the school expenses, and you were his dependent, he might be able to take an education credit or deduction. If he paid interest on the loan, and you were his dependent, then he could take a student loan interest deduction. He'll owe Gift Tax for the gift since it exceeds his $12,000 annual gift exclusion amount, unless he decides to tap into his lifetime unified exclusion which I would NOT recommend he do. It won't have any other tax consequences. He won't be able to claim the tuition deduction or student loan interest since you are not related and he is not legally obligated to pay your tuition. You won't get the deduction since you didn't actually pay it. |
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