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My friend is a nonresident alien student in the US. If he…

My friend is a...

My friend is a nonresident alien student in the US. If he receives a wire transfer from his home country, am I correct that is nontaxable income, and does it matter whether the money comes from his own foreign account or his parent's account? Does the act of receiving that wire transfer necessitate filing a return even if there's no tax due for that income?

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Answered in 10 minutes by:
5/6/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,980
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name's Lane.

...

You are correct. This is not income (earned income, passive income such as investment income, that can be taxed under the income tax system. As a matter of fact, IRC §102 specifically excludes gifts and bequests from taxable income. ( https://www.law.cornell.edu/uscode/text/26/102 )

...

If the money came from the parents' account this would be considered a gift and there IS a gift tax (a transfer tax just as with estate taxes) BUT IRS has no jurisdiction to tax the parents unless they are tax residents (US Citizens, green card holders or passing the substantial presence test) - Gift tax is paid by the giver.

...

If it's transferred from his account it's simply a transfer of assets he already owns.

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Thank you!

Lane

..

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986

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One last point - If this is sent as a gift from the parents and more than 100,000 is transferred during the tax year, a form 3520 needs to be filed to disclose the gift.

...

This is not a tax form, however, just a disclosure form for money tracking purposes.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,980
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane
Lane
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