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Submitted By: Charles
Answered: June 8, 2015 8:10 am
Answered: June 8, 2015 8:10 am
What tax liability results if I pay off my son’s mortgage?
You have no income tax liability, but depending upon the size of the remaining balance you may face federal gift tax issues. Your son has no tax liability; your generosity in paying off his mortgage is a gift to him.
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Tax Glossary
Lump-sum distribution
Payments within one tax year of the entire amount due to a participant in a qualified retirement plan. Qualifying lump sums may be directly rolled over tax free, or, in some cases, are eligible for current tax under a favorable averaging method.
