Gift tax and family loans
A loan you expect to be repaid isn’t a gift. A low-interest loan, a forgiven payment or money with no real plan for repayment can be, and the IRS has limits on how much you can give before you file a gift tax return.
The 2026 limits
$19,000 a person each year. In 2026 you can give any one person up to $19,000 without filing a gift tax return. A married couple can each give $19,000 to the same person, $38,000 together. If one of you gives more and you treat it as given by both of you, you must file a gift tax return to do that.
$15,000,000 over your lifetime. Gifts above the yearly amount are reported on Form 709 and count against this lifetime amount. Filing usually means using up part of this lifetime amount, not paying tax.
Source: IRS Revenue Procedure 2025-32 and the IRS gift tax pages.
What can count as a gift
Interest you didn’t charge, on a loan over $10,000 at less than the IRS minimum rate.
A payment you forgive. Forgiving a payment is a gift of that amount. Decide about each payment when it is due, not in advance: if forgiving is planned from the start, the IRS can treat the whole loan as a gift on the day it was made. Put each forgiveness in writing and date it.
A “loan” nobody expects to be repaid. The IRS says that if you lend money with the understanding that it may not be repaid, it is a gift.
How to show it’s a loan
Write it down and sign it, set a payment schedule, state the interest, and keep a record of every payment. Your agreement says in plain words that the money is a loan, not a gift.
This is how the rules read, not tax advice. A tax professional can tell you what applies to you.
Questions
Who files the gift tax return, the lender or the borrower?
The person giving the gift: the lender.
Is forgiving the whole loan at once a problem?
It’s a gift of everything still owed, added to anything else the lender gave the borrower that year. If the total is more than $19,000, the lender files Form 709, and the part over $19,000 counts against the lifetime amount.