Have a Tax Question? Ask a Tax Expert
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Is your father a resident for tax purposes?
If he is not a resident for tax purposes, and does not live in the US he has no gift tax reporting responsibilities
You do not have to file any returns either, unless the gift is over $100,000. If the gift is over $100,000 you will have to file form 3520
No tax is due from you, even if you have to file form 3520. Form 3520 is just an information return informing the IRS that you are the recipient of a gift from a foreign person.
If your father is a resident for tax purposes, you would never have to file the form 3520 and he will have to file form 709 if the gift is over $14,000 but no gift tax will be due so long as he has not gifted over $5.2 million during his life
So, the chances are very good that no tax whatsoever would be due with this gift.
HI i am fine thank you. How do I know if my father is a resienrt for tax purposes?
An how are you, sorry.
Does he live in the us more than 183 days per year?
No need to apologize, I am well.
No he lives in Italy permanently
Okay and does he have a green card?
No, he does not have a green card
Okay then he is not a US tax resident.
So, you would file form 3520 if the gift is over $100,000
If the gift is under that, there's absolutely no requirement to file any forms.
Ok. Does the fact that the money he may be giving me is currently in a US and not foreign accoutn make some difference?
No, it's for gifts from a foreign person, so where his bank is does not come into play
Great. And form 3520 will not require me to pay income tax, right?
Correct. It is an information return only
No tax is paid
And it's due with my regular tax reutrns?
Yes, but you send it in separately.
OK, fantastic. Thank you for your help today!!
You're welcome. If there's nothing else I can assist you with today, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today
Thank you! Afterthought: this was pertaining to gift tax. Would I be subject to income tax on the gifted amount? Thanks again
This is the answer I find inaccurate, or at least inconcistent with my reading of 26 USC 2511:
This appears to be inconsistent with http://www.law.cornell.edu/uscode/text/26/2511 which reads
"Subject to the limitations contained in this chapter, the tax imposed by section 2501 shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible; but in the case of a nonresident not a citizen of the United States, shall apply to a transfer only if the property is situated within the United States."
As I stated in my question and reiterated in the answer, the money I may recieve from a non resident alien is in the US. So i am not clear wheteher it is then taxable.
My concern was mostly regarding the fact that the gifted property was already in the US and thus the tax exemption seemed inapplicable if the property, even though gifted from a NRA, was "situated within the United States". Frankly that sentences confuses me.