Hi there. Simply transferring money from one account to another does not create tax liability. The bank is required to disclose the transfer, but it does not create a tax liability.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.
If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.
If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
I still need a few clarification:
(1) Is the bank disclosure included in the annual interest report? If the money transfered from oversea bank is more than $300K, will IRS question where the money come from?
(2) If we have the money transfer in 2010 and use it payoff our mortage in 2010, when we fill our 2010 1040 return, do we need disclose anything related to the money transfer?
1) No, it's not a tax issue. Although a $300,000 wire transfer will be disclosed and possibly result in some attention, it will not result in tax to you.
2) You need make no disclosure on your 1040. The financial institutions involved int he wire transfer will file the requisite disclosures.
(1) Only the U.S. bank (the receiving bank) is required the disclosure, right? Will the oversea bank (non-U.S.) also need send any disclosure to IRS?
(2) Normally, if the money draw IRS attention, what actions normally will IRS take?
You're welcom...1) That is correct; 2) The IRS is not going to take any action just due to a transfer. A transfer of money does not trigger a tax. It really is more of a Homeland Security issue...the government simply wants to know when money comes into this country for security purposes. A one-time transfer is not going to cause that much scrutiny. If you want, you could transfer it directly to your lender which clearly shows where the money is going.
How about my question # XXXXX?
I also heard that U.S is worldwide tax. Will IRS question where my oversea money come from?
Regard to your above question: do you mean tranfer the money from my oversea bank account to the mortage lender? If so, will my U.S> bank has no need to report the money transfer simply it is not even go through the U.S. bank?
Thanks for your patience.
One more and maybe the last one. :-)
Will IRS question how we get the money in our oversea bank account? will IRS consider it as our oversea income and therefore tax it. Additionally, I heard it is better to transfer the money from a third party (such as our relative) to our U.S. account to avoid the tax issue, does it make sense to you? do the third party transfer result in gift tax?
What if the money in our oversea bank is transferred from a third party oversea account and the third party has nothing to do with U.S. (never live in U.S. nor a U.S> citizenship), and then we transfer the money from our oversea bank to payoff the loan, does it trigger any gift tax?