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So if I lend a friend/family like 5k$, do I have to pay tax on that money when my friend/family pays it back to me?

A more concrete example: my brother in the USA would send us let's say 5k$ for some stuff. He's in the USA and we're in another country (Romania). After we send the 5k$ back, will he have to pay tax back on it?

We're talking about bank to bank transactions.

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  • You mean a loan repayment?
    – Trish
    Dec 5, 2020 at 21:08
  • I don't know if it could be called a loan, legally, since there's no contract, and it can be repayed at any time, or even never (since it's family/friends etc.)
    – Mesos
    Dec 5, 2020 at 21:20

2 Answers 2

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If one person lends money to another, that is a loan, even if there is no formal written agreement. Loan repayments are not taxable income under US federal income tax law (I can't speak for whether they might be in some other country).

Interest on a loan is taxable income, if any interest is payed.

However, the recipient might be challenged as to whether it is an actual loan repayment or a payment for some other purpose by the tax authorities.

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  • It wouldn't have any interest though.
    – Mesos
    Dec 7, 2020 at 1:34
  • @Mesos the mention of interest is just to make the answer more generally applicable, and more help to others. Dec 7, 2020 at 1:39
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Repayment of the principal of a loan is not taxable income under U.S. tax law.

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