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My parents are U.S. green card holders (resident aliens). They

are both retired and earn...
My parents are U.S. green card holders (resident aliens). They are both retired and earn no income in the U.S. or in their home country (India). I claim them as dependents on my tax return. They recently sold their property (house) in India and would like to gift the money to me and my wife. Do I need to pay taxes on this gift? Does it matter how the money is transferred to the U.S.? Thanks for the help!
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Answered in 20 minutes by:
2/4/2012
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,146
Experience: Taxes, Immigration, Labor Relations
Verified

Hi and welcome to Just Answer!

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

graphic

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.

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Customer reply replied 5 years ago

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?

 

Thanks again.

1. Are they still required to file a gift tax return? If so, which form(s)?

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

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?

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.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,146
Experience: Taxes, Immigration, Labor Relations
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Lev and 87 other Tax Specialists are ready to help you
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Customer reply replied 5 years ago

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.

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Lev
Lev
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