Loans to others in QP2011

Yep.

Use the Loan Wizard in Quicken. When you start the thing, the very first question it asks you is whether you're borrowing the money, or if somebody is borrowing money from you.

Set it up for zero interest. That would mean that all the payments (whose basic format you edit in the process of setting up the loan) go straight into principal payments, i.e., transfers from deposits in your checking account that debit the loan account.

It also means that, to do this right, the first check or whatever you gave that other individual is a debit from your checking (or whatever) that is a transfer into the principal account that sets up your initial balance.

Good luck!

KBeck.

IRS then says you gave a gift of the interest to that person at a % they assume. Not important unless you give other gifts and the years total then exceeds a limit currently at $11,000 per person per giver.

--Snippage

Did some checking on this one recently. As it happens I had made a loan to a relative a couple of years ago; said relative, having come into some money, paid off the loan, with interest.

So, being the anal-retentive type, I went looking for the tax implications. After getting past the usual fuss, found a good description of how to handle all this at the Motley Fool,

The eye opener: If the loan is less than $10K then, if the loan isn't used to buy stocks, bonds, and the like, the Feds don't care if the interest rate is low to zero. Above that limit and they care about what interest you're charging vs. the market rate. See the article.

If you _do_ charge interest, any interest you receive is taxable, just like interest you get from a bank account. Unless the loan is a mortgage, with all the additional hoo-ha that goes on with a mortgage, the interest paid is _not_ deductible on the payer's taxes.

You're not going to get a 1099 form from the relative, though. Fun.

For various reasons, as in, "Little pieces of paper keep everybody honest, even if they're all honest as the driven snow.", I'd suggest you put together a Note on the loan. It puts down in ink what the two of you are planning and, once signed by both parties, it's a lot harder to get into the "he-said, she-said" stuff. My relative and I did that, no lawyers involved. The hardest part was trying to figure out close out the note once the loan was paid off: There's lots of stuff on the internet on how to create a note, but not very much on how to make it go away after all the fun is over. I didn't quite sign things in blood to finish it off, but sure felt like it after an hour or so of searching for information.

KBeck.