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CGCPA
CGCPA, CPA
Category: Tax
Satisfied Customers: 3820
Experience:  over 40 years experience in tax matters
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Tax on gifts from abroad?

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Money gifts from abroad. I reside in the USA, and my parents (non-US citizens living abroad) want to wire me a substantial amount of money as a gift. It is their own money, and they paid taxes on it on their country. However – I am concerned I will be taxed for it when I receive it. Are money gifts from abroad to be reported in the tax return? What is the maximum amount of money that a US citizen can receive from abroad without incurring into a tax? What is the IRS regulation on how to handle money gifts from abroad?

Good morning,

Gifts, regardless of where they are from, are not taxable to the recipient. They may be taxable to the giver depending on where the giver resides. Since your parents live outside the US they should check the gift tax rules where they live. If they lived here in the US they could each give you up to $13,000 per year (total $26,000) without needing to file a gift tax return. The filing of a gift tax return in the US does not mean there is a tax to pay, just that the need to file a return has been triggered. It may be important to your parents to check local tax rules to see where they stand in their country. You, on the other hand have no issue here. I would suggest they send the funds in the form of a check or money order for safety and to permit record keeping on both sides of the transaction in case it is ever questioned.

Customer: replied 6 years ago.

I am not sure I understood. Do I have to report this gift to the IRS or not? Is there an amount limit? What is the maximum amount of money that an U.S. citizen can receive from abroad without incurring into a tax?

Thanks

There are two sides to a gift.You are the recipient and do not have anything to report to the IRS. Your parents are the givers (donors) and MAY need to report this in their country.
Customer: replied 6 years ago.

Thank you but, I asked twice and whether there is amount limit, and what is the maximum amount of money that an U.S. citizen can receive from abroad without reporting the gift to the IRS. Could you please point me to the IRS regulation about this?

There is no limit as to how much you can receive since the receiver of a gift is not taxed on the gift. There is also no reporting requirement imposed on the receiver of the gift. IRS Publication 950 is the reference source for the information I have provided. You can access the Publication at the IRS official website – www.irs.gov You may wish to print a copy for your future reference.

Customer: replied 6 years ago.

There is no reporting requirement imposed on the receiver of a gift?

How about form 3520?

Form 3520 is required only IF the amount of gift you receive is $100,000.00 or more. It does not impose a tax on the receiver of the gift. If the gift is going to be in excess of that threshold you may want to choose to receive some this year (less than $100,000) and additional funds next year (again less than $100,000). The only area of concern involved here is the reason the form exists in the first place - tracking money used by criminals and terrorists. It is, if it applies to you, just a reporting of a transaction between family members. Filling out the form, if you need it, is simple in itself. However, if you require assistance I will be happy to assist you in this.

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