Your granddaughter needs a car, but cannot afford the payments. As a favor, you provide the $25,000 to purchase the car. You tell your granddaughter to pay you back when she can, but there is no loan document. The IRS sees this payment during an audit and asks where your interest income is for this loan. Should this happen, you will quickly understand the meaning of AFRs.

For years, the tax code trend was to reduce the amount of interest that may be deducted on your tax return. Until recently, it really only allowed interest deductions as an itemized deduction on qualified residences and vacation property. That is changing now with the passage of the OBBB Act and the introduction of a new car interest tax break. Here is what you need to know:

Do you want to jump start your child's retirement with a million dollar tax-free account?