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I am a dual US/ French citizen. I am in the process of buying

a house here in NY...
I am a dual US/ French citizen. I am in the process of buying a house here in NY State and to help me with the down payment, my mother is giving me an advance on inheritance (called a "manual gift'/ don manuel in France, which must be reported but is not taxable up to 100000 Euros). My mom (French citizen and resident) is giving me 100000 euros on my French account and I would like to transfer it to the US.

Will it still be considered a gift for US tax purposes, since it first was transferred into my French account (so the transfer would be from my French account to my U account, rather than directky from my mom to me)?

If it is considered still a gift, do I need to pay any tax or do anything beyond reporting it via form 3520 (http://www.irs.gov/Businesses/Gifts-from-Foreign-Person)?

Thanks!
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Answered in 5 minutes by:
7/19/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,593
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

You are in luck in this situation...gifts are NEVER taxable to the recipient in the US. There is no gift tax return requirement, since your mother is not a US resident or citizen

MyVirtualCPA :

and so long as you report the gift on form 3520 you're good

Customer:

Right. But the money went from her French account to my French account first. So the final transfer will be from me to me (from MY French account to MY US account). Will it still be considered a gift in the eyes of the IRS?

MyVirtualCPA :

Yes, that's still a gift. It doesn't matter that you are transferring it to yourself from your french account

MyVirtualCPA :

The only thing is, since your french account had a balance of over $10,000 during the year, you will have to fill out form TDF 90.22-1 next year to report your foreign assets

Customer:

(She didn't want to deal with sending money abroad and wasn't sure how she could then report it to the French Tax system etc, so that's why she preferred to deposit the money from her French bank to mine.)

MyVirtualCPA :

That's perfectly fine

Customer:

That French bank account of mine was pretty much dormant since 1998 so I never reported it in my US tax return. Now will I need to report the French bank account as well? Would I use that same form to do so?

MyVirtualCPA :

You use TDF-90.22-1 for any account you must disclose to the Treasury Department (not the IRS - but you send the form to the IRS for processing) if you had a balance of over $10,000

Customer:

no the account was never above $10000. Does this form gets sent at the time of the annual federal tax return? What about NY State? Does it treat the gift differently?

MyVirtualCPA :

No, there is no state tax on the gift either. You do not send the form with your tax return, you send it separately

MyVirtualCPA :

http://www.irs.gov/pub/irs-pdf/f90221.pdf

MyVirtualCPA :

There's a link to the form

MyVirtualCPA :

You send it to Detroit for processing

Customer:

Are you referring to form TDF-90.22-1 or form 3520?

Customer:

When do I need to file each?

MyVirtualCPA :

The TDF form - you can find the address to send the form in the instructions to the form

Customer:

Thank you. I am still unsure of when I need to file/ send each form?

Customer:

Do I file form 3520 immediately upon receiving gift?

MyVirtualCPA :

You will need to file the TDF form no later than June 30, 2014

Customer:

And form TDF-90.22-1 next year at the same time than federal return?

MyVirtualCPA :

Yes

Customer:

and form 3520?

MyVirtualCPA :

You file that form with your tax return

MyVirtualCPA :

Is there anything else I can assist you with today?

Customer:

So form TDF-90.22-1 by June 30, 2014 and form 3520 with my federal tax return next year before april 15, 2014?

MyVirtualCPA :

Yes

Customer:

Thank you very much! I think that answers it all.

MyVirtualCPA :

Okay ... if you would, please rate my response as "excellent" so that I may receive credit for assisting you today

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,593
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Thank you for your positive rating. Please come back and visit MyVirtualCPA for your tax, finance, and social security needs. It was a pleasure working with you today.
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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 882
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Per the IRS instructions for Form 3520, which I have dealt with before, this Form is NOT filed with the Taxpayer's return. It must be filed by the due date of the return, but the instructions say to "Send Form 3520 to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409." Filing it with the tax return will NOT be considered filing and will expose the Taxpayer to considerable penalties!
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Megan C
Megan C
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