How do I account for money lent to me from my fiancee?

Cooking Engineer (CE): How do I account for money lent to me from my fiancee?
My fiancee recently wrote me a check (in my name) for $ 20,000 to pay off my student loan to save myself money. I am paying her back (with half the interest rate the loan was giving me).

How do I account for this extra $ 20,000 on my taxes and is there a way of avoiding paying taxes on it since the money is really just a loan?

Thanks!

Answers and Views:

Answer by SuperCactus
You don’t pay taxes on loans. She will have to pay income tax on the interest.

Answer by truenorth675
First $ 10,000 can be considered a gift.

Answer by ci§co kiÐ ™ lost her undies
ask a task advisor and adopt my family- that was nice of her!

Answer by taxreff
Loan proceeds are not taxable, and loan repayments are not deductible.

She will have to report the interest income, but you will not be able to deduct the interest as it is not secured by your home.

Answer by Wayne Z
You don’t have to report anything.

However, she must report the interest as income on her Schedule B.

Answer by Tess
You would file it under Form1040-Income on your taxes its line 7 other income reported on line 7 not from W2’s. And your fiance could use the money she lent you as an itemized deduction. And do a forced itemized insteaed of a standard deduction. That way she would have less taxable income.

Answer by msquaredinc
She will owe money for a gift tax. Only the donor has to pay taxes on amounts above 12,000 in 2007.

Answer by travelguruette
Loans are not taxable income

Answer by Owen E
I guess you found a sugar momma that was sure nice of her.
I do not believe you have to mention anything becuase you used the money to pay off another loan. You may want to ask your tax advisor when you do them just to be on the safe side.

I do believe she will have to claim the interest payment as extra income but since you just got it this would not be until next tax time. If it was after January 1st persay neither of you have to worry abou it until next year it would be considered in your 2008 tax year not this tax season since that ended on well you guessed it Dec. 31st.

It sure is great when you can get rid of some the bloody interest personally I just paid mine off and man it is awesome.

I do not think it right for them to put interest on student loans to begin with another way we get screwed trying to get a career.