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Im a US citizen, my mother is US Resident (green card). She

I’m a US citizen, my...
I’m a US citizen, my mother is US Resident (green card). She is visiting her home country and she has been giving money left from her brother, who died same year and left cash saving. There is no any real documentation about it as his death was sadden. My Mom has no bank account in the US as she didn’t really needed it being my dependent. She want to send these money to my bank account via wire transfer as a gift to me. What we need to report for Tax Purposes? Amount is less than 100K but more than $13000. My mother was a dependent at my previous tax return as she didn’t have any income.
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12/3/2012
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,261
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Robin D :

Hello and thank you for using Just Answer,

Robin D :

Because your mother is a US person (green card holder) she would be under the US taxation for gift taxes. If she gives you more than $13000, then she (not you) needs to use Form 709 and report the amount that is over $13,000

Robin D :

This is not to say that she will owe tax

Robin D :

Also the account that is in the other country.

Robin D :

If it is her account then she should be reporting either on FBAR (90-22.1 Form) or FATCA (possibly both if the money is substantial).

Customer:

do you know how this tax well be calculated and how much she will own ? I think amount is around 25000. It's in cash and she has a very small amount on her personal account

Robin D :

She would not owe tax on the gift,

Robin D :

Just report and use her exclusion for lifetime.

Customer:

So even if she has nothing to report on her Tax Return she still need to file form 709? Should I still file her as a dependent on my tax return for year 2012?

Robin D :

Yes you can claim your mother as your dependent provided she meets all the other items for that. The fact that she had money and gave it to you does not stop her from being your dependent

Robin D :

She needs to file the 709 and the FBAR form because she obviously had nmore than $10,000 in her account over there at some point inth eyear if she can give you $25,000

Robin D :

A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. The FBAR is not filed with the filer's federal income tax return.

Robin D :

The FBAR is an annual report and must be received by the Department of the Treasury in Detroit, MI, at one of the two addresses below, on or before June 30thof the year following the calendar year being reported.


File by mailing the FBAR to:



United States Department of the Treasury
P.O. Box 32621
Detroit, MINNN-NN-NNNN/p>

Robin D :

If an express delivery service is required for a timely filed FBAR, address the parcel to:



IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226


Robin D :

Hi, did I lose you in the CHAT

Customer:

how about proof of that gift money for my mom? her brother didn't left any documented will/note, but some money and my mother sold remaining furniture and other family items in his apartment - this total amount she has in cash and she didn't collect any documents. She has all money in cash as it's a country were people using mostly cash for everything. She has an account in local foreign bank where she has a deposit of 50$ for her retirement from foreign government, but total account balance maybe around 2-3K

Customer:

i'm trying to give more info

Robin D :

Ok

Robin D :

The proof for gift to you could be a simple written statement, nothing special

Customer:

so if she will write that she sold furniture and other items and giving case money to me - may simple work as a proof?

Robin D :

All she would need to write is This is a gift form her to you. But if she is going to havce a bank account over there (so you can have a bnk therre transfer the funds to your bank) she needs to file the FBAR. Even if she has it for 1 day

Robin D :

havce* sorry have

Robin D :

The gift to you is not a problem, she files the 709 (that is the proof for you getting the money), but not reporting bank accounts overseas are serious problems

Customer:

I'll check, i think her foreign bank can transfer just a cash to my account here. But if she will have a balance of 10000$ on her bank account there at some point - she will need to file FBAR? I'll check it with her next time we talk.

Robin D :

That is correct.

Customer:

one more question - for the future - my mom owns a property at foreign country which she became an owner after my dad died. Mom mom is living there when she is in her home country. I think next year we will try to sell it. in this case - will my Mother need to file a capital gain profit prom sale and how estimate a base price of her property?

Robin D :

Yes she will. Her basis is half the original cost and then what ever half of the fair market value was when she got your father's half. SO if the paid $50,000, her half of that is $25,000. When he past it was worth $100,000 (his half of that would be $50,000) her basis when she sells is $75,000 (plus any improvements she mad after he past).

Robin D :

Depending on the last time she used it as her true main homne (not living with you as a dependent). She has to own and live in the house for 2 out of the last 5 years prior to date of sale, she could exclude up to $250,000 of any gain.

Customer:

this all complicated when property is abroad and hard to determine values , in this case it does not matter if she will 'gift' property to me and I'll sell it - I think in this case I'll have to pay a bigger tax. This all for next year, but good to know

Robin D :

If she gifts it to you, you still have to determine her basis because that would be your basis.

Customer:

thank you, XXXXX XXXXX I'll need to ask you additional info about same topic - how can I find you?

Robin D :

Just Ask for me by name in your question or bookmark this page.


 

Robin D :

Please do not ignor rating the assistance, it is a very important part of Just Answer. Just Answer uses positive ratings and the follow up survey to ensure that experts are available for assisting and answering questions in the future.

Customer:

one more about gift declaration - any limit for my mom to declare as a gift for this year - as I said I'd estimate it as 25000 plus she may have more as she is going to sell some additional staff and have some cash back. What a lifetime limit?

Robin D :

Right now it is $5mil. She would need to report any amount of gift that is over $13000 in a year. This amount may change depending on what congress does in the coming weeks

Customer:

i see, for sure our limit much less :-) not millions :-) From a sale of her apartment (maybe next year), she will still need to pay a tax -capital game- and only then she can give me that money as 'gift' - correct ?

Robin D :

SHe can give you the property itself but you will hav ethe same problem with sale (knowing the basis) and she would have to report the gift. She will pay capital gains on the amount over her basis. Correct

Robin D :

Did you need more info before rating


 

Robin D :

Thank you again and best wishes

Customer:

I think I good info so far, will see how it will work, thank you, Robin

Robin D :

You are most welcome

Robin D :

You let Just Answer know you were assisted by rating my service to you

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,261
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Satisfied Customers: 16,261
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