How do I avoid paying tax if I will receive $100,000 from oversea? I receive this money because my parents want to give it to me to help me get a house in the US. I know bank will notify IRS if there are any international wire with amount over $10,000? Does this only apply to one bank account because I have several checking and saving accounts from different banks. I am thinking to get wire amount less than $10000 and into several checking and saving accounts. Does this idea works? Thank you.
Hello polo, First, it is not correct that the bank will notify the IRS of any wire transfer which exceeds $10,000. The $10,000 reporting rule only applies to CASH transactions, and does not apply to checks or wire transfers. Second, this would not be taxable money to you, regardless of whether or not the IRS were to find out about it. In the US, gifts are never taxable to the recipient. And the donor of a gift is not liable for gift tax until he gives more than $1 million in gifts in his lifetime. If your parents are not US citizens, then they are not even subject to those limitation rules. However, as a US citizen or resident alien, you would be required to report the receipt of any money that you received from a foreign source, if that amount exceeds $100,000 in any one year. This is done by filing Form 3520 with the IRS. No tax is due with the filing of the form, but it is a reporting requirement. Filing form 3520 is really for your own protection, as you will have a clear record of reporting where this money came from. Again, this reporting is only required if the money received in any one year exceeds $100,000. If your parents were tos end you only $99,000 this year, you would not be required to report this at all. If this was helpful please press the Accept button. Positive feedback is also appreciated. Thank yo polo.
My parents are US residents. Does this mean that I don't need to file any tax form and report anything as long as the wire is less than $100,000 per year?
Hello again polo, If your parents are US citizens or if they are resident aliens, then the rules are different. I assumed from your first post that they resided overseas. If your parents are US citizens or if they are resident aliens, then they are subject to the US gift tax laws. Neither of you would still owe any tax on this transaction, but it would be reported differently. Any US citzen or alien resident is allowed to give gifts in their lifetime of up to $1 million before any gift tax is due. They are also allowed to give annual gifts of up to $13,000 which do not even apply towards their $1 million lifetime limit. However, if a gift exceeds the $13,000 annual limit, then the value of the gift should be reported by your parents by filing Form 709 with the IRS. Again, there is no tax due with this form unless they have already used up their $1 million lifetime exemption, but it is a reporting requirement. If this was helpful please press the Accept button. Positive feedback is also appreciated. Thank you polo.
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad