IRS rules for transfer money – Money & Services


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I have a few questions regarding my concerns. I have a debt on 2 credit cards($4200 and $8600) and I want to be debt free this year so I can start improving my credit score. Luckily, I tried to save a debt for one credit card($4200) since it has a high interest rate and pay the whole amount in cash, but for the other credit card I asked my mom and she agreed to borrow me the money for the other credit card($8200). First I decided to get money from western union but there is a limit for $3000 on single transfer and if she transfer me the money 3 times it will cost her extra transaction money and plus I read on the western union website that if you transfer this much amount they can give you a hard time, so I talked to my credit card company and they said that my mom can wire transfer the money to directly to them on my behalf in order to avoid all this hassle and fees. Now my concern is if she would be able to do that and my credit card get the payment does IRS consider this as a gift money transfer and do I have to pay any tax or mention this when I will file at the end of this year. Does my credit card bank who is receiving the payment needs to report this to IRS, but since its less than $10,000, I am not sure what do I need to do for that, because I don’t want any surprises at the end of the year. I would really appreciate any help regarding this matter. Thanks.


If your mother pays off your credit card debt of $8200, this is considered to be a gift from her to you. Individuals are allowed to make gifts of up to $13,000 per year to any other individual without any gift tax conseqences whatsoever – this is known as the annual exclusion. So as long as the total value of all gifts you receive from your mother in 2010 is less than $13K, no worries. BTW – if her gifts to you were to exceed the annual exclusion, then she would have a gift tax issue, not you.

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