Helping Family Without Hurting Yourself

The story: Walt gets three asks

Walt’s son Marcus asks for help with a car, and Walt’s friend Grace shares how to decide between a gift, a written loan or a kind “not now.”

1. Marcus: Dad, my car died. Could you lend me $5,000? I’ll pay you back.
2. Walt: I want to help. But last year’s “loan” to your sister never came back.
3. Narrator: Later, Walt talks it over with an old friend, Grace.
4. Grace: Decide first: is it a gift or a loan? If it’s a loan, write it down. And never use money you need for essentials.
5. Walt: Marcus can get a car loan. I can’t get a loan for retirement.
6. Narrator: Walt offers a $1,500 gift Walt can spare, and helps Marcus compare car loans. Helping can take many shapes.

What you’ll learn

1. Gift or loan? Decide first

   Before you help, decide whether it’s a gift or a loan. Write loans down: the amount, the payments and the due dates. Large family loans may need a minimum interest rate set by the IRS.

2. Your own oxygen mask first

   Never use money you need for essentials. Your family can borrow for school, cars or homes. You can’t borrow for retirement, and lost savings are hard to rebuild without a paycheck.

3. Be careful with cosigning

   A cosigner owes the whole debt if the borrower can’t pay, and late payments hurt the cosigner’s credit too. Many retirees choose to help in other ways instead.

4. Fairness, and “not now”

   Think about fairness among your children, and keep records of help. Saying “not now,” with a reason, is loving too. Gifts above $19,000 to one person in a year need a gift tax return, though tax is rarely owed.

Key words

family loan

a written loan to a relative, with set payments

minimum interest rate

the IRS rate some family loans must charge

Also called: Applicable Federal Rate

equalizing

balancing help across your children over time

Common questions

Do I have to pay tax when I give my kids money?

Usually not. Gifts above the yearly amount on the card need a gift tax return, but tax is rarely owed. The giver files, not the person receiving it.

What if a grandchild lives with me and I’m raising them?

That’s different from a one-time ask. Many states have a kinship navigator program that can point you to benefits and support. A lesson on raising grandchildren is coming.

Remember this

Put your own oxygen mask on first.

Try it: Set up a family-help fund

1. Decide on a yearly amount you can give without touching essentials.
2. Write it down as your “family help” fund, next to your other goals.
3. Practice one kind way to say “not now,” with a reason.

No account: write the fund and its yearly amount on paper.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Yearly gift exclusion

  $19,000per person you give to

  Gifts up to this to one person in a year need no gift tax return

  As of 2026

  Source: IRS.gov(opens in a new tab)

• Minimum interest rates for family loans

  Source: IRS.gov(opens in a new tab)