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The gift is not a taxable income in the US - regardless of the value and regardless of the relation between the donor and the recipient - please see for reference the IRS publication 525 page 34 - http://www.irs.gov/pub/irs-pdf/p525.pdf
Generally, property or the money someone receives as a gift, bequest, or inheritance is not included into income.
For gift tax purposes...
The donor (the person who makes a gift) who is an US person may be required to file a gift tax return if the value of the gift is above $13,000 per person per year. There will not be any gift taxes unless the lifetime limit of $5,000,000 is reached.
For tax liability - it doesn't matter if the money are in the US or abroad. but if you have an account abroad - that might need to be reported if the total value is above $10,000.
Let me know if you need any help.
Thank you for the prompt response. I have a couple of follow-up questions.
The donors in this case are my parents. They are both green card holders, but have not filed any tax returns so far since they don't earn any income in the U.S. or abroad. I have been claiming them as dependents on my tax returns. So the questions are:
1. Are they still required to file a gift tax return? If so, which form(s)?
2. Should they be filing a general tax return even if they haven't earned any income and are being claimed as dependents on my tax return?
The fact of gifting has nothing to do with filing requirements for INCOME tax purposes. As they had no taxable income - they are not required to file the income tax return.
However in case of gifting more than $13,000 - they are required to file a GIFT tax return - form 709 - www.irs.gov/pub/irs-pdf/f709.pdf
There is no GENERAL tax return. There are different tax returns and are based on different filing. I think you are confusing income tax return and gift tax return.
Yes, I was thinking of income tax return. Thanks for the advice.
For income tax return filing requirements - see IRS publication 501 page 2 - see filing requirements for dependents - http://www.irs.gov/pub/irs-pdf/p501.pdf .
However if there is no income - they do not need to file income tax return.