Is it a gift or not?
There are a few things that this question prompts - Part of 'consideration', I imagine, would be the obligation of either party to follow through on an agreement, not only fair market value. Look at the thought experiment from the opposite perspective.  If you did not pay him $150 (maybe just $50 or even $0), would you be breaking a contractual obligation to him?  If he left after 2 hours because he forgot about a family event and did not finish your move, would he be breaking a contractual obligation to you even if you gave him $150? It seems it can be considered a gift (Update: in all cases) There was no agreement of what either party viewed as full consideration in a mutual exchange.   To put it another way: From your examples, there is no evidence that the performance of either party hinged on receiving mutual consideration from the other.  More Updates from comments: Patterns Matter Similarly to how the IRS may determine W2 employee vs independent contractor, patterns do matter.  If your friend has a pattern of helping people move in exchange for tens of thousands of dollars in gifts every year, the IRS would view that in a different light. A waitress/waiter has a pattern of accepting 'gifts' of tips in exchange for good service as a part of their established job duties. If you gifted your friend with $150/week when they watched your kids every Monday-Wednesday, that would be different. You are establishing a pattern, and I would suggest you may be establishing mutual consideration. In that case, consult a professional if you are worried. Amounts Matter This is why the gift tax exemption was created. The IRS does not care about the amounts in question here. It is too much of a burden to track and account for transactions that are this questionable and this small.  You gift your friend with a $20k car? Now you need to pay attention. Consult your CPA. You gift your friend $1k for helping build your new deck? The IRS does not care. Intent Matters Even in the first case, it is not necessarily true that your friend considers $150 to be mutual consideration for his services. Would he open a business where he offers that rate to the general public? I doubt it. He intends to gift you services out of his own free will, not because there will be an equitable exchange of value.  The intent of both parties is to give a gift. There is no evidence that would suggest otherwise to the IRS, it seems, even if they cared in the first place. "The IRS definition of gift you quoted has ""full consideration ... received in return"". If your friend's help is not contingent upon your monetary offer (as is the case in all your scenarios I believe?), then it shouldn't be viewed as consideration in return of your money, right?"
Are you planning on paying your son back?  If so, this is a loan from him.  If not, it is a gift.  Both have possible and different tax implications.  For example, gifts above $14,000 ($28,000 if your son is married) per calendar year may be subject to a gift tax.  If it is a loan, the IRS has rules about the interest rate you must pay him and taxes get more complicated if it is too low (or zero). Edit: Notice that if you are also married, I believe your son and his wife can give $14k each to each of you and your spouse.  If the house is in her name as well you may be able to pay as much as $56K without the gift tax.  Notice that this is a yearly amount, so if this was December you could get $56k in December and $56K in January. "I don't know if those machines work this way in the UK too, but here in the US you can often avoid the coin-counting fee if you opt to convert the money into a gift certificate instead of cash.  I routinely convert my coins to Amazon gift certificate money with no charge.  Individual machines differ in which particular gift cards they use, but at the least, almost all of them offer the option for a no-fee conversion to a voucher/gift certificate to the store where the machine is.  So it's likely you'd be able to use the machine to convert the cash to ""money"" you can use to buy groceries." It depends on:  In Canada, Ontario, Manitoba, Alberta and Nova Scotia have each enacted legislation to stop gift cards/certificates from expiring. Cards issued before the effective date are still subject to the old rules.  The legislation came into effect: There are several common themes: There are still some unusual exemptions such as mall gift cards in Ontario, Manitoba: Ontario is the first jurisdiction in   Canada to regulate gift cards. [...] Mall cards (e.g. Eaton Centre gift   card) will be covered by the expiry   date ban and the new disclosure rules.   However, these cards can temporarily   maintain their current fee structure   while the provincial government   examines options on how to best   regulate these types of cards. This   will allow more time to develop an   approach that strikes the right   balance for consumers and businesses. For specific details see the appropriate link. Let's define better the situation and then analyze it: Start with: End with: Process: So B has the same amount of money, just in a different bank account, but A and C changed states. A now doesn't have money, and C does, as the result of the transaction between A, B and C. The gift tax issue I see is the transfer of money from A (you) to C (your brother). If you're a US tax resident then you have $14K exemption from gift tax per person per year. £20K is more than that, so it will be subject to the tax. The fact that a third person was involved as an intermediary is irrelevant - for the purpose of gift tax there's no distinction between using a bank for transfers or a private party. Keep in mind that paying tuition directly to the institution on behalf of your brother may help you mitigate your gift tax liability - tuition payment made on behalf of your brother is exempt from gift tax. But it has to be made directly to the institution, it cannot pass through your brother. "There is no doubt that this is a scam (you ask a British solicitor for help with this sort of problem, not an American friend) but it's not as obvious as some answers seem to assume. Inheritance taxes always have to be paid before legacies can be received, and the funds are part of the estate not ""in the hands of the government"". There are certainly ways round the problem (which vary by country), but if the facts were as the asker sets out, this would be a reasonable request. You can bet they aren't and it isn't." I can't answer from the Indian side but on the UK side, if you and your friend are not related then there is no tax implication - you are effectively giving each other gifts - other than a possible inheritance tax liability if one of you dies within 7 years of the transfer and has an estate above the IHT allowance. If it is more convenient for you - sure, go ahead and create another account. Generally, when you give someone a check - the money is no longer yours. So according to the constructive receipt doctrine, you've paid, whether the check was cashed or not. The QB is reflecting the correct matter of things. It doesn't matter that you're cash-based, the money still laying on your account because you gave someone a check that hasn't been cashed - is not your money and shouldn't be reflected in your books as such. As much as I understand you friend is giving you $100 [Say Rs 6000] as gift.  There are 2 taxes;   Service tax: If your friend is using Remittance service. Around 0.12% of amount Rs 6000/-. Around Rs 7.20/-. Normally deducted from Rs 6000.   Gift Tax: The transfer is treated as Gift to you as its from Non-Relative, without any occasion. If the amount of Gift is more than Rs 50,000 a financial year, then you have to pay tax as per your tax slab for the entire amount. As the transfer in question is less than Rs 50,000 there is no tax liability. Further you are paying this to your friend, which again is looked upon as a Gift and if you friend receives more than the specified amount.