I have what I think is probably a simple question regarding Federal taxes. Do we have any experts here?

How about post your question???

OK, here is the situation.

A family member has offered to pay off my student loan. It is part of my inheritance, except she isn't dead, so I assume inheritance taxes don't enter into the equation. The plan is that she pay off the loan directly, with no money touching my hands. I'm wanting to know if there will be any tax consequences for me, or her. Details are as follows:

-Loan amount = 35K - 40K USD
-She is in Australia, and an Australian citizen.
-I'm of course in the USA, and an American.
-She is a relative (by marriage).

Disclaimer: I am not a tax expert. I am an accounting student with a very limited knowledge about federal taxation. Having said that, the gift tax is generally taxable to the donor which would be your family member. I have found the following information on the IRS website which sounds like it may exclude her in this situation though. Hope the information is useful.



What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.


Link to website: http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

Hmmmm..... My understanding of the language in the link is that I am NOT exempt, because technically she is paying off a loan to a financial institution, not tuition directly to an educational institution. My wife is going to call the irs to check, but I sure hope a student loan counts.

We figured out the tax thing, but now there is another BS issue I need to vent about.

To put the tax thing to rest first, technically it would be taxed because it would be considered a "gift" because it wouldn't be going directly to a educational institution. HOWEVER, for some reason it is the giver that pays the tax.... and being that she is not a US citizen, not US funds, bank, etc. (she doesn't file in US), there is no tax.

Now the loan company won't accept an online transfer from over-seas, and needs a certified check - fair enough. But here is the pisser.... the funds are in her account, but the Australian bank will not issue the check because the loan company's address is a PO Box; they insist on a "physical" address! I don't know about you, but every single bill we pay goes to a PO Box, including our taxes! Even if I were able to somehow find a physical address where the check is processed, the odds of it getting lost because I am one in millions of customers, who thinks they can send their check to a "special" address, well.... it's virtually guaranteed to get lost. Who would have thought it would be such a pain in the ar$e getting a loan paid off, when the money is freely given to you!

you dont need an address on the check to pay off the loan. she can make the check payable to whatever it supposed to be, and she can mail it to you, and you mail it to the banks PO box.

if her bank insists on needing a physical address, just give them the address to a local branch affiliated with the loan institution.

you dont need an address on the check to pay off the loan. she can make the check payable to whatever it supposed to be, and she can mail it to you, and you mail it to the banks PO box.

if her bank insists on needing a physical address, just give them the address to a local branch affiliated with the loan institution.

Yea, I would think she wouldn't need it either. We have gone a round a few times via email. It doesn't really make any sense to me whatsoever. I know the money is coming out of a retirement account, so I don't know if that makes it different from a regular cashier's check from a regular checking account.

That's a good idea about the address. The institution is Sallie Mae.... I'm not real sure what bank would be affiliated.

Now we are starting to get somewhere....
Her response, "The physical address for the business head office is a legal requirement for international transfers or bank cheques...... I shall be sending the cheque to the PO Box as required but for the international transfer of money, the authorities need to know where it is going i.e. a physical address. It only goes on bank papers and be available for government scrutiny and tracing purposes should it be necessary. The cheque will be made out without an address and a notation that it is for your account and your account number to make sure it goes into the correct account."

This gave me the idea to search for their coorporate address, rather than payment location, and this is what I found: http://maps.google.com/maps?pq=sallie+mae+corporate+office&hl=en&cp=31&gs_id=g&xhr=t&tok=VRRO3dMyVjRlq3vXnpVQtg&rls=com.microsoft:en-us:IE-Address&rlz=1I7DKUS&gs_upl=&bav=on.2,or.r_gc.r_pw.,cf.osb&biw=1280&bih=642&wrapid=tljp132172146454806&um=1&ie=UTF-8&q=sallie+mae+corporate+office+address&fb=1&gl=us&hq=sallie+mae+corporate+office+address&cid=0,0,8460530060974565707&ei=hN7HTqTSOKOoiALJ0cHaDw&sa=X&oi=local_result&ct=image&sqi=2&ved=0CBMQ_BI

300 Continental Drive
Newark, DE 19713

Who would have thought google maps would be the answer....