Home › Guides › Write an IOU

How to write an IOU to a family member (with a sample)

An IOU is a short note that says who owes whom, how much, and when it will be paid back. For a small family loan it takes five minutes and saves a lot of "I thought you said..." later.

Checked 2026-09-28 · All guides

Make your IOU

Fill in the names, the amount and the payback dates, and our free generator writes the IOU for you to print or save. It runs in your browser; nothing you type is sent to us. Or copy the sample further down and change the details.

What do you want to make?

Loan agreement (full) Short IOU (one page) Schedule only

Has the money already been lent?

No, this is a new loan Yes, it was lent earlier (put it in writing now)

Lender's full name (who lends the money)

Borrower's full name (who repays it)

Lender's address (optional)

Borrower's address (optional)

Amount lent ($)

Date the money is (or was) given

Amount already repaid ($, if any)

How will it be repaid?

In regular payments All at once, by a date

Repaid in full by

How often? Every weekEvery two weeks (each payday)Every month

Date of the first payment

Set the schedule by

Number of payments Amount of each payment

Number of payments

Amount of each payment ($)

Interest

No interest Charge interest

Interest rate (% a year)

Interest starts on (optional: leave empty to start on the day the money is given; set a later date for an interest-free start)

Lender's stateChoose…AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Borrower's stateChoose…AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Other loans the lender made in the last 12 months (optional)

The borrower is a relative

How payments are made (e.g. bank transfer to the Lender's account, or cash against a signed receipt)

Days of grace before a payment counts as late

If a payment is late We talk and agree a new date in writing The missed payment moves to the end of the schedule The lender may ask for the whole balance within 30 days

Late fee per late payment ($, optional)

State whose law applies (optional)Leave outAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyomingDistrict of Columbia Add a line for a witness

Everything stays in this browser. Nothing is sent to us or saved. We never hold or move money.

IOU, promissory note or loan agreement?

All three put a loan in writing. The difference is how much they cover. This is how we use the words on this site:

• IOU ("I owe you"): a few lines. Who owes whom, how much, and when it will be paid back, signed by both of you.
• Promissory note: a signed promise to pay, with more detail on the terms, such as interest, what happens if a payment is late, and whether the whole amount can come due at once. See our promissory note template.
• Family loan agreement: the fullest version. It covers both sides' duties, a repayment schedule, what happens if someone dies or can't pay, and more. See our family loan agreement template.

When an IOU is enough, and when to use more

An IOU usually fits when:

• the amount is small, the kind of sum you could both live with if things went wrong;
• the payback is simple: one payment, or two or three on set dates;
• you trust each other, and the note is mainly so you both remember the same thing.

Use a promissory note or a full agreement when the amount is large, the payback runs over many months, interest is charged, the money is for a car or a home, or other family members will want to know it was a real loan. For large amounts, a lawyer can review the paper before you both sign.

How to write an IOU: what to put in it

1. Both full names: who is lending (the lender) and who is borrowing (the borrower).
2. The date the money was lent, and the date you sign. Write the real dates. If the money changed hands last week, say so; never put an earlier date by the signatures than the day you actually sign.
3. The amount in figures and in words, like "$400 (four hundred dollars)". Words stop anyone misreading or changing a number.
4. What it's for (optional): "for the car repair". It helps you both remember later.
5. When it will be paid back: one date, or a short schedule with an amount and a date for each payment.
6. Interest or no interest: say which. If there is interest, write the yearly rate and the total to be repaid.
7. "This is a loan, not a gift." One line that settles the most common family argument.
8. Both signatures, each with the date signed.
9. A copy each. A phone photo of the signed page works.

Does an IOU need a witness or a notary? No. No state we checked requires a notary or witness for an unsecured personal loan note or IOU; what's required is a writing signed by the borrower. Notarizing is optional. What it adds is easier proof: a notarized signature is "self-authenticating" under the federal evidence rules, so nobody has to testify that it's real (Federal Rule of Evidence 902(8)), and several states have the same rule.

Can a simple IOU be enforced? Yes. A signed IOU is proof of the debt, and together with the fact that the money was lent, a court can enforce the loan as a contract. The difference from a promissory note is technical. Under the Uniform Commercial Code, "I owe you $400" on its own is an acknowledgment of a debt, not a promise to pay, unless it also says the borrower will pay (UCC §3-103). A note with a clear promise to pay a fixed amount on demand or by set dates, "to the order of" the lender, can be transferred like a check (§3-104); a simple IOU usually can't. That matters if the paper is ever sold or signed over, not for whether you can collect. Our sample says "I will repay it", which adds the promise.

How long you have to go to court is set by each state, and it's often longer for a written debt than for a spoken one. California, for example, allows 4 years to sue on a written agreement and 2 years on an unwritten one, counted from when it was broken (California Courts Self-Help).

A filled sample IOU

Sam needs $400 for a car repair. Their sister Jordan lends it, and Sam pays it back in two parts, on the next two paydays, with no interest. Change the names, dates and amounts to yours.

How to record payments

Keep a payment record on the back of the IOU, or in a note you both can see. One line per payment: the date, the amount, what's still owed, and both sets of initials. Paying by bank transfer or a payment app also leaves its own record; write "IOU payment 1 of 2" in the memo.

When the last payment is made, the lender writes "Paid in full" and the date on the IOU and signs it, and the borrower keeps that copy.

Do small family loans have tax rules?

General information, not tax advice. Checked 2026-09-27.

• Small interest-free loans: the federal rule on low- and no-interest loans (Internal Revenue Code section 7872) generally doesn't apply to a gift loan directly between individuals on any day when the total of all loans outstanding between those two people is $10,000 or less. It does apply if the loan is used to buy income-producing assets, such as stocks or rental property. A married couple counts as one person, so two parents lending to one child share one $10,000 limit. Our $400 sample is well under it.
• No IRS form for the IOU itself. Tax paperwork comes in only if interest is paid (the lender reports it as income, IRS Topic 403) or a gift above the yearly limit is involved.
• Loan or gift? For a loan that's never repaid, the IRS asks whether you meant it as a loan when the money changed hands (IRS Topic 453). A written IOU with dates and a record of payments is good practice to show that; it isn't an IRS requirement.

Questions about your own situation? IRS Volunteer Income Tax Assistance and Low Income Taxpayer Clinics help for free if you qualify.

What if the IOU isn't paid?

Start with a friendly reminder a day or two after a missed date, and offer a new date. Keep the IOU and your payment record together. If it still isn't paid, someone owes you money walks through the next steps, and the reminder scripts give you the words to send yourself.

This page is general information, not legal advice. Tight Month is not a law firm.

Related

• Free loan agreement and IOU generator
• Promissory note template
• Family loan agreement template
• Someone owes you money: what to do

Sources

• 26 U.S.C. §7872: below-market loans, including the $10,000 exception in (c)(2)
• IRS Publication 550 (2025): Below-Market Loans
• IRS Topic 453: bad debt deduction (loan or gift, intent at the time)
• IRS Topic 403: interest received must be reported
• IRS: free tax help (Volunteer Income Tax Assistance)
• Taxpayer Advocate Service: Low Income Taxpayer Clinics
• Uniform Commercial Code §3-103: an acknowledgment of a debt isn't a promise unless it undertakes to pay (Cornell LII)
• Uniform Commercial Code §3-104: negotiable instruments and notes (Cornell LII)
• Federal Rule of Evidence 902(8): notarized documents are self-authenticating (Cornell LII)
• California Courts Self-Help: before you start a small claims case (unpaid loan; 4 years written, 2 years unwritten)

Sources checked 2026-09-28.

General information, not legal or financial advice. You send every message yourself; we never contact anyone on your behalf.