<prompt> Human: My mom is gifting me 12,000 out of the blue. She decided to do it because my sister was recently turned down for a promotion that everyone thought she was being groomed for and she just got her masters degree. So my mom decided to pay off her student loans as a gift. She felt she might as well give me the same. See, she recently retired and shes been saving her whole life to do this. I remember her yelling at me when I was a teen for throwing out envelopes and stamps because Id made a mistake on the letters inside. I thought it was so over the top for her to get mad at me wasting a few measly dollars of stationary. But as it turns out she was right and I was wrong because I have debt and shes got money to give to her kids. I was shocked and quite moved when she told me. Shes never given me this kind of money before, I mean, besides raising me and providing for me as a child :A few years back I got some major credit card debt due to what I would describe as career transitioning and a lot of stupidity. It got away from me. Ive been at my current job for 6 years and make 53K annually. When my cards maxed out, I took two loans to pay them down because I was scared that if I had an emergency situation Id be screwed with no money. So I took loans to open up my credit cards. Im trying to figure out how best to tackle this debt with this 12K. One loan has a balance of 2,200 and I pay 284 monthly. The second loan is 6,400 and I pay 306 monthly. So thats 590 Im paying each month. My current credit card debt is 20,000. Thats one card. I have two other credit cards but those have been paid off already. My interest is about 16 each month if Im doing my math correctly. I maintain only about 2,000 in my checking account at all times. I pay 900 in rent which includes utilities. My job pays for my phone. I also have a 401k with 7,869. My instinct is to pay off those two loans in full. That would leave me with an extra 690 each month. I could use that money to help pay down my credit card. But of course Id also be using my credit card at the same time. I usually pay 1K to credit card each month. This way I could do 1,690. If I pay off those loans. Id still have 3,354 left over from the money my mom gave me. I could use that to pay down the card as well or keep it in an account. One of my questions is also is if getting this 12K means Ill end up owing taxes when file. I usually get back between 7-8K dollars when I do my taxes. Would a 12K gift mean I have to pay major taxes on it? Or would it just be part of my income? And if its just counted as income, is it enough to drastically effect whether or not I earn or owe? How do I report it? If it means I have to owe then I want to make sure I maintain enough in my bank account to pay it back.What do people think of my plan? Is there another way I should go about it? Should I pay off the loans and put the remainder to the credit card balance? Let me know if you need additional information and Ill try to provide. Thanks!Assistant: You shouldnt need to calculate how much interest youre paying on your CCs. It should say on each statement what the APR is on the remaining balance.If you have only one CC with 20k debt on it - and thats your highest interest debt - then you should put the full 12k towards it as soon as you can. Continue to put whatever extra money you can towards that outstanding debt. If either of those two loans have higher interest than your CC, then pay off the loans. Always pay off the highest interest debts first.You dont pay taxes on that 12k. Dont touch your 401k.How on earth are you getting a tax return of 7-8k a year? How is your W-4 setup to pull taxes out of your paycheck? Im assuming no deductions? Check your tax returns for the last 6 years of your job and compare to your gross income over that period. You may be able to adjust your W-4 so that you have as close to 0 as possible for that tax return and then put the extra money each paycheck towards your debt.Human: I forgot to mention that the loans have their own rates. The 2,200 has a rate of 23.44. The 6,400 has a rate of 18.80The APR on the card is 19.74. Id read something online about figuring out monthly interest. Thats how I came up with that 15. Yes I claim single zero. I rent my apt. And I have some pretax deductions. My job has a benefit for example where I pay for my subway card using a pretax deduction Assistant: Why are you claiming zero and giving the government an interest free loan while simultaneously paying 20 APR on debt?Human: I sincerely have no idea what those two things have to do with each other lol. Pardon my ignorance. I just know that I get money back at the end of the year by claiming zero. But clearly theres something I dont understand  <response>: Youre getting your own money that youve overpaid in taxes back. Money that you could be using throughout the year to make debt payments. 