Have a Tax Question? Ask a Tax Expert
I am a foreign national living abroad would like to gift US 300,000 to a US citizen residing in the US. We have no blood relation. Does my donation get undue scrutiny due to the Patriot Act and can I become part of a lenghty enquiry process? How I can I do this without doubt falling onto my intentions?
As far as Income Tax, am I liable to pay any tax? What about the recipient?
What are the risks in transacting such a payment when it comes to issues like money laundering, national security issues as well as income tax/ IRS realted issues?
Is it advisable , in the current environment, to even process such a remittance?
There is no way that I can be assured that the recipient will use the money for just causes, even thought he has been a close friend for more than 30 years. I am sure he is a just and fair man, but in today's world, why get implicated when we really never know the inside workings of anyone?
If you are a foreign national living abroad, and you are not also a Legal permanent Resident, you have no filing requirement to the IRS on this issue.
The U.S. does not have any gift taxes that are due to a recipient of a gift.
However the recipient of the gift has to report this to the IRS for security issues on the following form 3520. Again this is for reasons related to the Patriot Act and anit-money laundering regulations. http://www.irs.gov/businesses/article/0,,id=200722,00.html
There is no reason not to make the gift if it is really a gift unrelated to money laundering and terrorism. The U.S. Treasury security branch (Secret Service) may investigate the source and use of this money. These are security idicators they look for using electronic data bases.
If you are a U.S. Legal Permanent Resident working and living abroad, then you have a reporting requiredment to file a gift tax return. But no gift tax is assessed until you exceed your life time gift tax exclusion. For non-U.S. Citizens who are legal permanent residents, this is now about 330,000 dollars. Until you exceed the exclusion amount, you do not pay gift taxes.