Can I deduct personal loans or use them as tax “write offs?”
You will have to write it off as an offset of capital gains or as bad debt against personal income, limited to $3k/ yr. Write off 3k this year, 2k next. Here's the tax code, you'll need to file a form 8949, link below. https://www.irs.gov/taxtopics/tc450/tc453 So, this requires that it is a loan, acknowledged by both you and the borrower, with terms of repayment and stated interest, as well as wording for late payments and time for delinquency.  The loan document doesn't have to be fancy, but it must show a reasonable intention of repayment to distinguish it from a gift.  Then send out a 1099c for cancellation of debt. This is a starting point, it's a good idea to run everything by your tax processional to make sure you're meeting the requirements for bad debt with your contact and payment communication.
"Assuming you are talking about an LLC in the United States, there are no tax repercussions on the LLC itself, because LLCs use pass-through taxation in the U.S., meaning that the LLC does not pay taxes. Whatever you take out of the LLC in the form of distributions goes onto your personal income tax as ordinary income, and you pay personal income tax on it.  See this link on the subject from the Nolo.com web site: Tax treatment of an LLC from the Nolo.com web site Repayment of your loan by the LLC would just be another business expense for the business itself.  I guess the question would then turn on what your personal tax repercussion would be for payments received from the LLC on the loan.  I would guess (and I emphasize ""guess"") that you would pay tax on any interest gain from the loan payments, which makes the assumption you made the loan to include interest.  If not (in other words, if you made this an interest-free loan) then it would be considered a wash for tax purposes and you would have no tax liability for yourself. To reiterate, the LLC (if it is a U.S.. entity) does not pay taxes.  Taxation of LLC income is based on whatever distributions the principals take out of it, which is then claimed as taxable personal income. My apologies to littleadv for not making my prior answer (I deleted it) more clear about my answer assuming you were speaking of a U.S.-chartered LLC. I hope this helps. Good luck!" You need to report the interest expense, assuming the loans were for your business: You need to report interest expense (only interest, principle is not an expense just as the loan proceeds are not income). The interest expense goes to the appropriate line on your Schedule C or E (depending on whether you used the loan for the online business or the rental). People whom you borrowed from must also report the interest as income to them on their Schedule B. You cannot deduct the interest expense if they don't report it as interest income. If you didn't take the loans for your business then the interest is not deductible. You don't need to report anything. People who lent you money still have to report the interest you paid to them as income on Schedule B. If you paid no interest (free loan) or below/above market interest to a related party (family member), then the imputed interest is considered income to them and gift to you. They need to report it on their Schedule B, and depending on amounts - on a gift tax return. For $1K to $10K loans there probably will be no need in gift tax returns, the exemption is for $14K per year per person. If the imputed interest rules may apply to you, better talk to a licensed tax adviser on how to proceed. "Here is a simple loan payment calculator.  If you allow early principal repayment, then you should just be able to plug in the new principal amount to find his new monthly payment (someone please correct me if I'm mistaken). Are you averse to creating a spreadsheet yourself in excel?  I suppose it could become quite an undertaking, depending on how detailed you chose to get with the interest.  Seems like it would be more direct and serve the dual purpose of recordkeeping. It's important to agree in advance whether pre-payments go to principal or go partly to interest (prepaying for periodic amounts not yet due, which are mixed principal and interest).  It's a family loan, so it probably makes sense to allow the prepayments to pay down principal; you don't need to structure your interest income and prevent him from depriving you of interest income (which many bank loans will do).  Allowing early principal repayment is pretty easy to calculate in your own excel spreadsheet, since you just need to know the remaining principal, time outstanding, and the interest rate. Note that if you are a US citizen, then the interest paid to you will be taxable income to you (""ordinary income"" rate).  Your brother will not be able to deduct the interest payments, unless maybe they are used for something like his business or perhaps mortgage.  There is no deduction for just a personal loan. Also, if you instead structured it without interest, then the interest not charged would be considered a gift under US gift tax law.  As long as the annual interest were under the gift exclusion amount ($14,000) then there would be no gift tax.  With no interest and no gift, you would not have tax consequences." "Yes, as long as you are not filing ""Married, Filing Separately,"" you can deduct student loan interest expense as an adjustment to income. Since your MAGI is < $60k, you can deduct the lesser of $2,500 or the actual interest expense. http://www.irs.gov/taxtopics/tc456.html http://www.irs.gov/publications/p970/ch04.html You didn't mention how you might file your return. If you're filing jointly in future years, the MAGI threshold prior to any phaseout is raised to $125k (for CY 2013)." First, you need to see if you actually qualify as a dependent under IRS rules; in short: While there may be exceptions to the cohabitation rule, I am not sure what those could be.  The takeaway is that if your parent is wishing to claim you as a dependent, they must be responsible for supporting the majority of your living expenses (e.g. food and shelter). If this is the case, then the next question is to look at how the impact of the exemptions play out.  In your situation, I would guess that your mother is correct:  your taxable income is likely to be so low that if you do not take an exemption for yourself, you probably would still have zero or minimal tax liability; but if you mother claims you as a dependent, she will be able to take a deduction. In the case of your grants and loans, the loans should not be taxable income since these need to be repaid (presumably, with future earnings).  Federal grants may be taxable--basically, the portion of the grant that is used solely for paying educational expenses toward a specific degree (tuition and books) is non-taxable, but the remainder may be subject to tax. As for tax credits, you would need to see how much you would get and how they would apply to you.  The bottom line is, there are too many variables to say for certain what the best approach would be, so both your and your mother's returns must be prepared under each scenario (you as her dependent, versus you claiming a personal exemption). If your business is a Sole Proprietorship and meets the criteria, then you would file form Schedule C. In this case you can deduct all eligible business expenses, regardless of how you pay for them (credit/debit/check/cash). The fact that it was paid for using a business credit card isn't relevant as long as it is a true business expense. The general rules apply: Yes - if you sustain a net loss, that will carry over to your personal tax return. Note: even though it isn't necessary to use a business credit card for business expenses, it's still an extremely good idea to do so, for a variety of reasons. I recently paid-off $40k in student loan debt. One of the motivations for me to accelerate my payments was that over time, as my income increased, the amount of student loan interest I could write-off on taxes started to phase-out. Use a limited company. Use the HMRC website for help on limited companies and get a good accountant for doing your taxes. Mixing your website income and personal income  may make you pay a higher tax rate. You can take out expenses from the limited company, which are tax deductible. But if you group it in personal income it wouldn't be tax deductible. In a personal capacity you are 100% liable if your business goes bust and you owe debt. But for a limited company you are only liable for what you own i.e %age of shares. You can take on an investor if your business booms and it is easier if you do it through a limited company rather than through a personal endeavour. "Do you mean how much income tax the IRS will assess? Loans are not income, therefore they do not incur income tax. So as long as the money isn't being given, but being loaned, you don't have to pay income tax on it. And just in case you think there's a loophole of ""Instead of paying my workers, I'll just 'loan' them their paychecks, and then forgive the debt at the end of the year"", no, the IRS does consider loan forgiveness to be a form of income. So you need to look at whether the loan is going to you, or whether your business is a separate legal entity that is getting the money. If it's a capital contribution, then you are selling a stake in your company. Or, more precisely, as long as the money is going into the business, the company is selling a stake in itself. In that case, there generally isn't tax owed. Here's a Quara question that touches on this: https://www.quora.com/Is-money-raised-through-investors-taxed" I'm not an expert, but here's my $0.02. Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of $50,000, and you buy a laptop that costs $800. You won't get a write-off from that, because 2% of $50,000 is $1,000, and you can only deduct business-related expenses in excess of that $1,000. If you have an AGI of $50,000 and buy a $2,000 laptop, you can deduct a maximum of $1,000 ($2,000 minus 2% of $50,000 is $2,000 - $1,000 = $1,000). Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of $50,000 and buy that $2,000 laptop, but only use it 50% for business, you can only write off $500. Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent. If the mortgage is against your primary residence, then the only part that's (probably) deductible is the mortgage interest.  If you pay down your loan principal faster, then all other things being equal you'll get less of a tax deduction, because you'll accrue less interest in the months after you throw a big chunk at the principal (the principal is less, so the interest is less). But don't worry; that's all right!  It's a tax deduction, so your actual tax savings will be only a fraction of the interest you paid, so at the end of the day you'll be saving yourself money. The principal of the loan itself isn't any sort of taxable event.  There are, however, two taxable events here. First, cashing out your 401(k).  That income wasn't originally taxed, so it will be now, as regular income.  Plus, you're going to pay a 10% penalty, assuming you're under 59.5 years of age. Second, when the business pays you interest, that interest will be taxable.  The principal is not taxable; that's not income, after all. You simply are getting back what's yours.  The interest is taxable, as that is the actual income here. Graduating from college is probably one of the most fulfilling triumphs you’ll ever achieve in your entire life. However, that joy also brings bigger responsibilities in life that could affect tax time too. This specific time in your life will have a lot to offer and before the winds of change take you to wherever you dream of, here are some advices from [Southbourne Tax Group](http://www.thesouthbournegroup.com/) to make your taxes easier where you can get a refund during filing time and save money as well.  If your modified adjusted gross income is below $80,000 and you’re single, up to $2,500 of the interest portion of your student loan payments can be tax deductible, and below $160,000 for married person filing jointly.   Job hunting expenses can be tax deductible too but there are exceptions such as expenses involved in your search for a new job in a new career field and working full-time for the first time. 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According to the IRS:  To deduct a bad debt, you must show that: So if you fulfill the basic requirements, then generally yes, you can deduct them from your taxes.  However, as always, please refer to a professional CPA for any final tax determinations. There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.