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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10432
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am a US citizen and am trying to transfer an amount of

Customer Question

I am a US citizen and am trying to transfer an amount of money from my fiancé in India to me here in Denver Colorado. I've completed and paid for all of the related costs, however after I paid the cot (cost of transfer amount) I received a new screen requiring that now I must pay additional taxes? I'm new to these type of transactions and had hoped that after we paid the COT code, the money would be ours, yet now I realize we are required to pay US taxes before we can access the money from the transfer. The original amount was around $ 800,000 USD. Could you possibly help my fiancé (in India) and I with the tax amount due so that we can finally make this transaction?***@******.***. Thanks so much for your assistance!
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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There should be NO taxes due on a transfer like this.

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Simply moving money from one country to another (unless there is a sale, or it's earned or passive income of some sort).

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Simply wiring money from one person to another MIGHT be considered a GIFT, but there is a $5,430,000 lifetime exemption on gifts in the US from GIFT tax, and gifts are completely excluded from INCOME tax under IRS section 102.

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Honestly I a little worried that this might be a scam of some sort.

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Virtually every one of the inquiries we've received involves a bank account in the United Kingdom and a funds transfer to or from a bank account in a country that is now or was formerly part of the British Commonwealth of Nations....we found no reference that remotely suggested that such codes are in legitimate use by banks. All we could find is references to scams and fraud, usually involving attempts to use the Internet to transfer funds.

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The C.O.T. code supposedly stands for Cost of Transfer. You should contact your bank for assistance in any transfers of money. A Cost of Transfer is allegedly needed to complete international wire transfers. COT (Cost of Transfer) codes are frequently mentioned in variations on Nigerian "419" or advance-fee scams.

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Generally you need to have the routing number or code of the bank to receive funds plus the name or account number of the recipient account at that bank in order to complete an interbank wire transfer of funds, you should not have to pay anyone to obtain that information.

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This is VERY similar to a scam I heloped someon uncover today ... first there was the "COT". Once the scammers had had THAT money, they THEN asked for taxes (only withholding agents and taxing authorties should be asking for taxes) to get additional funds from the victim.

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Again, the transfer you mentioned IS NOT a taxable transaction.

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Please let me know what questions you have from here.

Lane

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