Bank transfer between family members, what reason to enter? How to avoid tax checks

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It is not enough to write “xxx” in the reason for a bank transfer: it is important to enter the correct wording to avoid sanctions or problems with the tax authorities.

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In times of greatest economic difficulty you may have had to ask a friend or relative for a loan. In the latter case, although the family at best is always ready to help you, nevertheless the IRS may not always turn a blind eye to excessive family generosity.

So how can you send money via bank transfer to family members without incurring tax penalties?

Let’s start by saying that by law there is no economic restriction placed on family transfers. You can therefore send very large sums to brothers, sisters, children or parents but always keeping one detail in mind. At the time of shipment you will need to specify the “reason” why you are arranging a bank transfer, specifying the “reason” in the subject of the shipment. The reason must always be clear, as unambiguous as possible, justifiable and demonstrable through traceable payment instruments. We can therefore write as causal “interest-free loan”, “gift”, “donation”, “gift” or other clear justifications on the reason for that transfer. In this way we will communicate to the Revenue Agency the nature of the transfer and our intentions.

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What to do if the transfer involves high amounts?

It is true that there is no legal limit on sending money, but it is also true that the tax authorities tend to monitor transfers with large amounts. Second the art. 782 of the Civil Codedonations of a large sum of money are considered void if they are not made in the presence of at least three people, generally a notary and two witnesses. According to the art. 783 however, donations of this type do not require a notary. However, it is important that the size of the transfers and donations is economically sustainable for the donor: if the donor does not suffer significant impoverishment, the donation can be considered of “modest value”. In the event that the reason for a bank transfer is incorrect, this could be possible incur financial penalties or, worse, criminal consequences.