To clear up any misconceptions, the answer is a resounding yes, you can legally loan money to family in the U.S. But just like dipping your toe in the stock market, the process is saddled with legal subtleties that demand your attention.
For example, lending money to family can manifest potential tax implications. According to the IRS and under the U.S. law, dubbed the 'Applicable Federal Rate'(AFR), any loan above $14,000 could be subject to gift tax unless you charge an interest rate at least as much as the AFR.
Yet another morsel to chew over is the maximum interest rate you can levy. Usury laws at the state level stipulate the cap on interest rates, and charging beyond these rates can land you in legal hot water.
Therefore, it’s safe to navigate these financial waters with a solid family money loan agreement. This knot-tying document should be compliant with IRS guidelines and federal and state laws to avoid any unpleasant surprises down the line. After all, when you decide to loan money to a family, you're playing banker, and bankers deal with an arsenal of rules and regulations, don't they?