Have a Tax Question? Ask a Tax Expert
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.
Good morning. You owe no tax in the U.S. on a gift from a person not a U.S. citizen. For any amounts received in excess of $100,000 per calendar year, you must file Form 3520 with the IRS; this is only a reporting requirement; there is no tax. There is no maximum amount of gifts you can receive from a non-U.S. citizen. I don't know what the laws are regarding the donor in their country, however.
I hope thishas given you information that has been helpful to you. If the informationseems more general thanspecific, please be aware that we are only allowed toprovide information and notspecific advice. If youhave a follow-up question, please remember that there might be a delay betweenyour follow up questions and my answers because I may be helping others ortaking a break.
If you do have any additional questions about my answerplease simply ask a follow up question without rating so I can provideyou with a fully satisfactory answer. Please be aware that any rating of 1 or 2 isreflected as a negative rating, reflects negatively on my performance, and Ireceive no credit for my answers.
Thanks for allowing me to be of service to you. Please beaware that the information provided here is not legal advice. Rather it issimply general information. All states have intricacies in their laws and anyinformation given is simply information only and specifically is notintended to be, nor does it constitute, legaladvice. This communication does not establish an attorney-client relationshipwith you. I hope this answer has been helpful to you.
What about the $150,000 that I received last year and didn't report it. I would like to report it with my current tax return. Is there any penalty for that?
This is not income and thus it does not get reported on your income tax return. You simply file the Form 3520.
The penalties for failure to file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, can be substantial. Penalties for not filing in a timely manner or if the information provided is incomplete or incorrect are assessed at 35 percent of the gross value of the "reportable event." The reportable event could be a distribution from the trust or a transfer of property to the trust. The beneficiary must file the form if there has been a distribution from a trust or estate. The transferor must file the form if there has been a transfer to a trust. Gifts (in excess of specified thresholds) from foreign persons must also be reported by US donees. The penalty for failing to report a gift is 5 percent of the amount of the gift for each month for which the failure continues (maximum 25 percent). Form 3520 is due at the same time as the tax return of the U.S. person (including extensions) according to the form instructions. However, the Internal Revenue Code (IRC) Section 6048 provides that Form 3520 is due on or before the 90th day (or such later day as the Secretary may prescribe) after any reportable event. The practice seems to be to file in accordance with the Form 3520 filing instructions; however, penalties may be assessed. To avoid any risk of penalties it would be advisable to file Form 3520 within 90 days of a reportable event.
Relief from penalties is provided if the taxpayer can demonstrate that the failure to comply was due to reasonable cause and not willful neglect. A written submission to the IRS must be made to request abatement from penalties assessed. Lack of reporting due to foreign country or foreign fiduciary limitations is not considered reasonable cause.
You might want to determine that the 2011 funding was actually a loan which is forgiven in 2012....thus the report could then be timely made based on the gift at the time of forgiveness.