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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Gifts from foreign parents to daughter who is a US citizen.

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Gifts from foreign parents to daughter who is a US citizen. Money comes from a US bank. Gift amount about $150,000

Lev :

Hi and welcome to Just Answer!
As a recipient of a gift - the daughter does not need to claim it as income. Regardless of the value of the gift. Please see for reference IRS publication 525 page 31 left column - http://www.irs.gov/pub/irs-pdf/p525.pdf

Lev :

Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance is not included in your income.
.
The fact of receiving the gift from a nonresident alien is separately reported on form 3520.
-http://www.irs.gov/pub/irs-pdf/f3520.pdf.
In general, Form 3520 is due on the date that your income tax return is due, including extensions. There is no tax associated with that form. Only gifts above $100,000 are reported.

Customer:

OK. Thank you. XXXXX publication 525. Here is what I got:

Lev :

.


The donor (the person who makes a gift) who is an US citizen may be required to file a gift tax return if the value of the gift is above $14,000 per person per year (for 2013). If the value of the gift is less than $14,000 per person per year - there is no tax consequences for the donor. That would be the donor who files form 709 - not recipients of the gift. There will not be any gift taxes unless the lifetime limit of $5,000,000 (adjusted every year for inflation) is reached.


However considering your situation - because the donor is not US citizen nor a resident of the US nor the property is located in the US - foreign parents are not under US jurisdiction and are not required to file the US gift tax return.

Customer:

1 - Gift - no need to claim as income = no tax liability. 2 - Must file form 3520 to comply with IRS. That is what I was hoping for.

Lev :

Your understanding is correct - only form 3520 is needed to report the gift from abroad because it is more than $100,000.

Customer:

Lev - one last clarification. The parents are foreigners, however, the money is in a US bank. So my wife received a check from her mother from a bank in Miami. Does that change anything?

Lev :

None. Because donors are nonresident aliens - only the gift of tangible property suited in the US is subject of gift tax.
A check is NOT a tangible property.

Customer:

OK. Thank you. You have been extremely helpful.

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