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I have considerable amount of savings in an overseas account.

I don't work and this...
I have considerable amount of savings in an overseas account. I don't work and this was a gift from a friend who deposited this money into my overseas bank account. Now I want to wire this money from overseas account to my U.S bank account. I asked an accountant and he told me if I wire no more than $100,000 at a time then I would not have to declare this to IRS.

My question is:
1. If I wire 4 times of $100,000 in a year the total amount of wire exceeds $100,000 even though each wire is less than $100,000, would this automatically trigger the alarm at IRS?

2. Wiring from my own bank account overseas to my own bank account in the U.S I believe I can wire any amount legally as this is self to self, not someone else wiring to me therefore there's no gift tax involved. I'm just wondering if I wired more than $100,000 a year to my own account, does this violate any law?
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Answered in 14 minutes by:
3/1/2010
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,615
Experience: Taxes, Immigration, Labor Relations
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There are several issues in your situation which should be discussed separately...

 

As a recipient of the gift - you do not need to claim it as income. Please see for reference IRS publication 525 page 33 - http://www.irs.gov/pub/irs-pdf/p525.pdf

graphic

 

The donor - if he/she is an US citizen or an US resident might be required to file a gift tax return - and might be a subject of gift tax - but mot the recipient.

 

In case you received the money as a gift or inheritance or as a distribution from the foreign trust and - if the amount is more than $100,000, you are required to file form 3120 - http://www.irs.gov/pub/irs-pdf/f3520.pdf (see instructions for details - http://www.irs.gov/pub/irs-pdf/i3520.pdf) to declare transfer from the foreign country. There is no tax associated with this form.

In additional - your bank might be required to report your transaction - so I would suggest to consult with the banker if they need any supporting documents so your transaction would not look suspicious.

 

Using the scheme to make several small transactions to avoid reporting you might commit structuring - that is a crime regardless if there is any gift tax liability of not.

See the law section this matter - http://www.law.cornell.edu/uscode/31/usc_sec_31_00005324----000-.html

 

Structuring - it is a felony - even there is no any tax liability and no money laundering. I strongly advise against this. See for instance this article -
http://www.forbes.com/forbes/2008/0407/038.html

While the situation described is slightly different - that is the same offense - structuring with a purpose to avoid reporting.

 

You may be required to report on the Schedule B part III that you have accounts in the foreign country if the combined value of the accounts was $10,000 or less during the whole year. See details in the instructions to that form http://www.irs.gov/pub/irs-pdf/i1040.pdf on the page B-2 (sequential page 93) There is no tax associated with this reporting - this is for informational purposes only.

 

The form TD F 90-22.1- http://www.irs.gov/pub/irs-pdf/f90221.pdf that is referenced on the schedule B should be filled if you have financial interest in or signature authority, or other authority over any financial accounts, including bank, securities, or other types of financial accounts in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. This reporting doesn't constitute tax liability.

The Form 90-22.1 is due June 30th of each year to report foreign bank accounts owned in the previous year.

 



Edited by LEV on 3/1/2010 at 6:24 AM EST
Lev
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Customer reply replied 7 years ago

Can you further clarify for me:

 

The amount in my overseas account is inheritance from my overseas relatives(a non-U.S citizen), for example, is inheritance non-taxable? Also I heard each person has 1 million dollar non-taxable gift allowance a year. Is this why the inheritance under 1 million is not taxable?

 

What can I expect if I wire in $300,000 and filed From 3120? Would IRS write to me to ask for supporting docuements for inheritance received overseas?

 

Thanks!

As a recipient of the gift or inheritance - you will not include it into your taxable income.

There is no any limit on the amount.

 

Yes - you need to be prepared to support the source of funds.

I can't say if the IRS will ask you for any supporting documents - but you need to have them.

 

 

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,615
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 7 years ago

Can I hire you to do the reporting for me? What is your fee?

Customer reply replied 7 years ago
can you do the reporting for me? and your fee if you can?

Just Answer advises experts not to contact clients outside this site.

Posts are for general information, and do not establish a professional-client relationship.

 

Sorry - but you would need to look for a tax preparer licensed in your state.

 

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