If you decide to loan the money, there should be terms attached. For smaller amounts, you might be comfortable with a handshake agreement that it will paid back within a short time frame.
For larger amounts — which, again, should be in writing — you should make sure the document includes details on repayment. This should include specifics like the monthly payment amount and a date when the loan will be paid in full.
If the person will be paying you interest, include that information in your agreement.
While you might be disinclined to charge interest to someone you're close to, the IRS could consider it a gift if the loan is above the yearly gift exclusion ($15,000 for 2018) and comes with no interest.
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Because everyone's situation is different, it's important to consult your advisor to find out how a loan will impact your bottom line at tax time now and in future years.
Once the terms are set and in writing, you both should sign and date the agreement. This way, there can be no dispute down the road over what was agreed to.
"When it's in writing, everyone understands the parameters," said certified financial planner Mark Byelich, principal of Wealth & Advisory Associates in Newtown, Pennsylvania. "Otherwise everyone could walk away with a different interpretation."