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Foreign Gift Tax – Are Gifts from my Nonresident Alien Parents Taxable?

Approximately 13.5 percent of the current U.S. population is comprised of immigrants. As a result, there is an increasing demand for information about the correct handling of tax situations involving Green Card holders and both legal and illegal residents, such as foreign gift tax. Of course, with such a spotlight on ensuring that all government demands and requirements are met, it is essential to make sure you are in total compliance with reporting all types of income and submitting the applicable forms.

Are Foreign Gifts Taxable?

Some foreign gifts may be taxable. As you prepare your taxes, you must review the requirements to determine whether you should include gifts received from a foreign person in your taxable income, whether they be a cash gift from parents overseas or the transfer of real estate or other tangible properties.

The lifetime exclusions for foreign cash and real estate gifts are quite high, so many taxpayers feel that these taxes can be ignored or believe that they probably don’t apply to them. However, neglecting to report foreign gifts to a U.S. citizen, as well as not correctly filing the associated form(s), can result in penalties from the IRS.

To make sure you are in compliance with tax law, let’s take a look at what the IRS considers a foreign gift, why foreign gift reporting is so important and how to stay on top of the forms, due dates and additional documentation.

Foreign Gift Tax For Gifts From A “Foreign Person”

Nonresident alien parents often want to give gifts to their children who are U.S. citizens or Green Card holders. In such cases, the recipient needs to know if there is a tax on gifts from their parents. Unfortunately, these rules can be complicated and aren’t well-publicized. Below is some basic information to help you understand and apply these rules.

What Is A Foreign Gift?

The IRS defines a foreign gift as money or other property received by a U.S. person from a foreign person that the recipient treats as a gift and can exclude from gross income.

The person who receives the gift is known as the “donee,” while the individual providing the gift is known as the “donor.” If you are the donee, your gift isn’t reported as income, and you will not be required to pay an income or foreign gift tax. However, if the value of the gift is greater than a certain amount, you may be required to report it to the IRS. If required, you must report the gift on Form 3520.

What About A Cash Gift From Parents?

As with gifts from other foreign persons, cash gifts from parents who qualify as foreign persons don’t subject the recipient to taxes, and the recipient will not be required to include the gift in their gross income. If any foreign gift tax is required, the donor will be responsible for paying the tax on Form 709. However, the recipient/donee may still need to file an additional form to report the gift if it exceeds a certain amount.

But… to get all of your questions answered, be sure to request our free e-book.

How About A Non-Cash Gift?

If you receive a non-cash gift from a foreign person, it may be taxable if it is U.S.-based property. There are differences in the foreign gift tax treatment of cash and property, in which a non-resident alien donor is subject to foreign gift tax on transfers of real and tangible property situated in the United States. However, the donee is still not responsible for paying the associated taxes.

Who Is A Foreign Person For Foreign Gift Tax?

According to U.S. tax law, a “foreign person” is a non-resident alien individual or foreign corporation, partnership or estate.

Examples of foreign persons include:

  • Parents or other family members of a U.S. person who reside in another country
  • A foreign estate from which a U.S. taxpayer receives real estate or other tangible properties
  • A foreign business (unless it is tax-exempt) who gifts a taxpayer a particular amount of cash or other valuable property


When Must Foreign Gift Tax Be Reported On The Form 3520

As a Green Card holder, a person is considered a U.S. tax resident and must report all worldwide income to the IRS. If the Green Card holder receives a gift from his or her nonresident alien parents, the Green Card holder may be required to file Form 3520 with the IRS.

Form 3520 is simply an information return and is due on the same date as your income tax return, with an extension offered until October 15. It must be filed separately from Form 1040. This form must be submitted only if the gift exceeds certain thresholds.

While foreign gift tax may not be due by the donee, a gift from a “foreign person” does need to be disclosed to the IRS if it exceeds certain thresholds.

Basically, the disclosure of your foreign gift or inheritance on the Form 3520 is required if you:

  • Received more than $100,000 from a non-resident alien individual or a foreign estate (including foreign persons related to that non-resident alien individual or foreign estate) that you treated as gifts or bequests; or
  • Received more than $16,111 for 2018 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts.

 
For example, consider a young man who is a U.S. citizen purchasing his first home. He receives gift money from his parents overseas totaling $40,000 to apply to the purchase of his new home. This money will not need to be reported AND no additional forms must be filed by the U.S. taxpayer. However, should he have received $120,000 as a foreign gift from his parents, then he would need to include the amount on Form 3520, but it would not be included as part of his gross income.

All Foreign Gifts Received For The Tax Year Must Be Aggregated

When calculating these threshold amounts, you must aggregate gifts from different foreign non-resident aliens and foreign estates if you know (or have reason to know) that those persons are related to each other or one is acting as a nominee or intermediary for the other.

For example, if you receive a gift of $75,000 from nonresident alien individual A and a gift of $40,000 from nonresident alien individual B, and you know that A and B are related, you must add the amounts and complete Form 3520 with the total of both gifts from alien individuals A and B.

Additionally, the IRS may consider gifts from foreign corporations and partnerships as disguised compensation and may re-characterize the gift as compensation that must be included in gross income. However, it is important to note that a gift to a U.S. person does not include any amount paid for qualified tuition or medical payments made on behalf of the U.S. person.

How To Prepare Form 3520

Whether you are self-preparing or have obtained the assistance of a certified tax professional, you must know certain details to completely prepare Form 3520.

On Part IV of Form 3520, the value of the gift from a non-U.S. citizen must be reported. If the gift wasn’t cash, it is imperative that the correct market or retail value of the foreign gift be included. In some cases, the taxpayer may find it helpful to seek the skills of an appraiser to guarantee the market value of the gift, especially if it is connected to real estate. The taxpayer should keep detailed records of the process by which the gift’s value was estimated.

Unlike Form 709, which is prepared and filed by foreign person who is actually giving the gift to the U.S. taxpayer, the responsibility to accurately file Form 3520 on time is the sole responsibility of the gift’s recipient.

In instances where the exact worth of a foreign gift cannot be ascertained, taxpayers must provide what is known as a “Beard” filing of Form 3520. This filing must:

  • Contain a signature, under perjury and its associated penalties
  • Be a purported return in its filing
  • Be a reasonable and honest attempt to remain in absolute compliance with the IRS with any estimates provided
  • Contain the required information so that the IRS can determine any tax liability

 

Once the Form 3520 has been filed, the statute of limitations (three years) under which the form can be audited, begins.

As Form 3520 can be complicated, especially if it is your first time including it as part of your filing process, it is best to seek the help of an experienced tax professional one who understands these laws.

Penalty For Failure To Report Foreign Gifts On Form 3520

In the case of a failure to report foreign gifts, a penalty equal to 5% of the amount of such foreign gifts applies for each month for which the failure to report continues (not to exceed a total of 25%). No penalty will be imposed if the taxpayer can demonstrate that the failure to comply was due to reasonable cause and not willful neglect.

To demonstrate that you had reasonable cause for failing to file Form 3520, you must provide the IRS with:

  • The reason for your failure to file
  • A detailed list of ways in which you attempted to remain in compliance with tax law
  • If applicable, evidence that you lacked knowledge of the applicable tax law
  • If applicable, evidence that you relied on a tax professional or other expert who advised that Form 3520 did not need to be filed or could be filed later

 

How To Get Up-To-Date With Filing Form 3520

If you have failed to file a required Form 3520 on one or more occasions, you need to get in compliance as soon as possible. Do not wait for the IRS to contact you, as this could make you ineligible for programs or procedures that are designed to help taxpayers get in compliance with the IRS and tax laws. Instead, file Form 3520 as soon as you have gathered the required information.

Differences Between The Foreign Gift Tax Treatment Of Cash And Property

To complicate things even further, there are differences in the foreign gift tax treatment of cash and property. According to I.R.C. Section 2501(a); Reg §25.2501-1, a nonresident alien donor is subject to gift tax on transfers of real and tangible property situated in the United States. According to the IRS, if you are a nonresident alien who made a gift subject to foreign gift tax, you must file a gift tax return (Form 709) if:

  • You gave any gifts of future interests,
  • Your gifts of present interests to any donee other than your spouse total more than $13,000, or
  • Your outright gifts to your spouse who is not a U.S. citizen total more than $136,000

The gifts are taxed at the same rates that apply to U.S. citizens.

As you can see, the foreign gift tax rules are extremely complex and vary with individual circumstances. Before proceeding, it is best to consult with your tax professional.

Get Expert U.S. Tax Preparation Wherever You Live

Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on the taxation of US taxpayers living abroad. Our services include Foreign Gift Tax disclosures. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate Americans abroad on their tax responsibilities, so that they can stay in compliance.

The United States is known as a country filled with persons of different cultures and nationalities, making it one of the greatest melting pots for diversity on the planet. Therefore, it is extremely important for tax professionals to be up-to-date on all programs and procedures that can affect U.S. citizens living overseas (expats) or U.S. taxpayers who have received gifts from foreign relatives or other persons.

For further guidance on how to self-prepare your Form 3520, please see the Form 3520 Instructions.


Published by Randall Brody
Updated: November 1, 2013

About Randall Brody

Do you want to ensure that you are paying the lowest tax liability legally possible? And ensure that your return is accurate, complete and complies with all tax laws? Request a quote to see how I can help you.

92 thoughts on “Foreign Gift Tax – Are Gifts from my Nonresident Alien Parents Taxable?

  1. Hi Randall,

    I found on IRS website, it mentioned the 3520 form is required if the receiver is a U.S. person. The defination of “U.S. person” seems point to green card holder and U.S. citizen. I wonder for non resident alien and resident alien(like h1b) receiver, is the $10,0000 rule still having effect? Thanks!

    1. Hi Evelyn, a US person is a US citizen or US resident. If you meet the definition of a US resident alien, then the Form 3520 filing requirements would be applicable.

      All the best,
      Randall

  2. Hi,
    I am herein US on EAD and my parents from India want to send some money to my kids.
    if that amount is less than $10,000 do I need to report it as income.
    I will really appreciate your response.

    Thanks,

    Laxman

  3. Randall,
    My father-in-laws mother lives in Uruguay. She is 92 and transferred her only asset which is a house to my father-in-law and his 2 siblings. They subsequently sold the house to help pay for the living facility she is currently in and will split the money 3 ways (60K) and transfer it back to the US. Will my father-in-law have to pay a capital gains tax on the house since it was transferred instead of inherited?

    1. If a us green card holder gifts his foreign non resident daughter $500,000 is there a tax reporting requirement … form 709 and uses up some of unifies credit ?
      I see a lot going foreign to us person / alien but not us to foreigner

  4. What about married individuals? What if 1 person receives 50,000 and the spouse receives 60,000 from the same related person in the same calendar year? Is this reportable? Do the husband wife have to file a joint 3520 if the are filing a joint 1040?

    1. You and your wife each constitute a “U.S. person” and would only be required to file a Form 3520 if either one or both of you received “more than $100,000 from a nonresident alien that you treated as gifts or bequests.

      Randall

    2. Randall

      Thanks for your speedy answer. However, just to clarify, I take your answer to mean that a husband and wife must add together the total value of the gifts or bequests and measure that against the $100,000 reporting threshold.? Thus I wouldn’t be able receive 99,000 and she couldn’t also receive 99,000 (from the same related person in the same year) resulting in no 3520 to be filed?

      Greg

  5. My father a Canadian Citizen and I a US citzen own shares (membership) in a cooperative building and the certificate membership reads joint tenants right of survivorship. When my father passes away do I have any tax filing that needs to be done here as we don’t own title but shares of this cooperative and his shares will revert to me.

    1. Hi Barb, it’s possible that you may currently have filing obligations on your interest in the foreign company (i.e. the shares) and when you inherit additional shares that additional filing obligations may apply. It depends on a number of factors, such as your current ownership percentage, ownership percentage after inheritance, type of foreign entity, value of you and your father’s shares, etc.

      If you would like to provide additional details on these factors, please feel free to email us direct at info@taxsamaritan.com.

      Randall

  6. I am a green card holder. my parents live in their home country. They made me a gift above $100K this year but because of a family situation they do not agree with, they took it back a couple of months later. I imagine I still have to file the form 3520 but what happens not that I dont have the gift anymore? I am affraid that because the funds went out again it would be seen a me making a gift to them and then I have to pay tax on it. Thanks for your thoughts.
    Maria

    1. Hi Maria, you are correct. A Form 3520 would be required to disclose the receipt of the gift. Likewise, unfortunately, a Form 709 would be required to report the gift back to them.

      All the best,
      Randall

  7. Hi. Can my grandmother who is a resident and citizen of Japan help pay for my college tuition? Are there any limitation? Are there any forms to fill out for the IRS?

    Thanks!
    Nicole

    1. Hi Nicole, there is no limitation on the amount of gifts that you can receive. However, depending on whether your grandmother is a US person (i.e. US citizen, green card holder, etc) or a foreign person will determine whether any disclosure forms are required on your behalf. For example, if you were to received $100k or more in cash gifts from a foreign person, disclosure of the gift(s) would be required on the Form 3520.

      All the best,
      Randall

  8. Dear Randall,

    my dad is selling a house in Italy and he is planning on gifting me roughly $300,000+ to help me buy a house in the US (where I am Permanent Resident).

    It is clear to me that I will have to file in the 2016 Tax return a Form 3520, what is unclear to me is the following: how much will it be cut as tax fees of the overall 300K, roughly? I could get any figure online. Thanks so much for this great service!

    All best,

    Gabe

  9. If my parens are foreigners and do not live in the USA but they have an account in a U.S. bank if they give money do I need to pay taxes I live in the USA thanks

    1. Hi Benny, as the receiver of a gift, US taxes are not due. However, if received from a non-resident, disclosure may be required on Form 3520 if the reporting threshold has been met.

      Randall

  10. I’m green card holder my father passed away in Spain, where he lived from 45 years ( he was Cuban citizen). He left me 120.000 in stocks in Spain. Do I need to file here for that money.?
    Thanks for your answer.
    Best
    Maria

  11. Hi Randall,

    I am a US citizen and my dad (Indian citizen) wants to gift me 50K USD. He made this money by selling a home in India and he paid taxes for the total amount he got for the house to Indian Government. Based on what i am reading on your site, he should be able to wire the amount to me and I should not have to declare or pay taxes next year for this amount. Can you please confirm?

    Regards,
    Sree

  12. Hi Randall,

    I am about to receive a gift of 100,000 GBP from my parents who are not US citizens, I am a US citizen. Only half of that sum will be transferred into the US for the purpose of purchasing a house. From your helpful answers above it sounds like I will only need to declare this in the form 3520 if the total accrues to over $100k over the calendar year. Therefore would it be correct to say that since I have done my taxes already for 2014 I do not have to complete form 3520 until the end of this year 2015, and then only if the total received comes to greater than $100K?

    Secondly, will the funds entering the US be taxable as income in my 2015 federal and state taxes? I am currently resident in California but am about to move to Georgia, would either state be advantageous/problematic for bringing the fund into the US.

    Many thanks,

    Emily

    1. Hi Emily, a Form 3520 filing requirement for a cash gift from a foreign person is triggered once there is more than $100,000 in cash gifts. As the recipient of a cash gift, there is no tax liability incurred, only disclosure once the filing thresholds are met.

      All the best,
      Randall

      1. 1. When the gift is more than thresh hold amount (1 year) $14000 made by both donee and donor are permanent resident or citizen, needs to file 3520. In this situation, I understand donee, receiver, doesn’t need to pay the tax. Does donor need to pay the tax for more than $14000 or just file and need to pay the tax when the life time amount is more than $5.2 million?

        2. If the amount given by foreigner is more than 100k(in 1 year), the donee, US green card holder or citizen, just needs to file for this received money, but doesn’t need to pay the tax, only donor need to file the gift money is legally taxed earning by foreign country. Am I right?

        Thanks.

        1. When a US donor provides a gift over the annual reporting threshold, Form 709 (US Gift Tax Return), must be filed. There are many factors, as part of the gift tax rules, that need to be taken into account including the lifetime exclusion to determine whether any tax will apply. This is something that is determined on an individual basis.

          Likewise, if a cash gift of more than $100k is received from foreign persons during the tax year, the US person (donee) receiving the gift will need to disclose the receipt of the gift(s) on Form 3520. There would be no tax due from the recipient as a result of receiving the gift.

          All the best,
          Randall

  13. Hello Randall,
    I have dual citizenship of US and Ireland. I have been living in Ireland since 2008 and am about to receive some money after my Father (Irish, non-US citizen) recently passed away. The amount is $70,000 approx cash and a 1/5 share of his house ($63,000 approx) so total over $100,000 and needs to be reported on Form 3520.
    My 4 siblings (all non US citizens) are then ‘Gifting’ me my Fathers house (total value $63,000 x 5 = $315,000). I will have to pay 33% Irish Gift Tax on this amount…would I also have to pay US Gift tax on this $315,000 amount or do I just report it on Form 3520?
    And if I sell the property immediately is the Capital Gains/loss tax on the full $315,000 or just the difference in value of when I was “gifted” it and then sold it?
    best regards,
    Hugh

    1. Hi Hugh, as a recipient of a gift/inheritance there is not tax imposed.

      Capital gain (loss would not be deductible on personal property) is based on the difference between the sales proceeds and basis of the property. The basis of property inherited from a decedent (your 1/5 share) is generally one of the following:

      – The fair market value (FMV) of the property on the date of the decedent’s death.
      – The FMV of the property on the alternate valuation date if the executor of the estate chooses to use alternate valuation. Not likely in this situation since it’s a foreign property.

      The basis on the portion gifted is the adjusted basis of the giftor at the time of the gift.

      Randall

  14. I have dual citizenships, US and Swedish, I am to receive a little less than $100,000 from my father which is going to be deposited into a bank account in Sweden. Do I have to report such a gift to the IRS?
    If the circumstance is the same but the gift is more than $100,000 would that be treated differently?

  15. I am on H1b visa and want to send 30 k to my out of country parents (non US citizens). I can split it with my wife so we both can send 15 k each. Do I need to file a gift tax return?

    1. Hi Qasim, in 2015 the annual gift tax exclusion will be $14,000. This is the same as the 2014 exclusion.

      What this means is that if make any gifts that exceed $14,000 in 2015, then you will need to file a federal gift tax return (Form 709).

      Best regards,
      Randall

  16. Hi,

    I’m a US citizen and my parents live in India (they are not US Citizens). My dad wants to gift me some money (less than 100K) to help towards a home purchase I’m considering. As per my understanding I would not have any tax liability and in addition would also not need to fill out Form 3520, give the amount is less than 100K.

    Pls. confirm.

    Thank you,
    Pawan

    1. Hi Pawan, my recommendation would be to review the content of our article and the Form 3520 instructions to confirm your filing instructions. I can confirm your Form 3520 filing requirements as part of a tax engagement. If you would like us to review all of the facts of your situation, please let us know and we can do a brief consultation.

      Best regards,
      Randall

  17. Hi Randall
    I am living in India and my daughter is working in the US under H1B. I would like to gift some money to her. Is this taxable under the US tax laws.

    Regards

    Suresh M

    1. Hi Suresh, as a recipient of a cash gift, there is no taxation of the gift “per se”. However, depending on the total amount of gifts received during the calendar year, your daughter may be required to disclose the gifts on Form 3520.

      Best regards,
      Randall

  18. Hi Randall,

    I am a US citizen living in the USA. My father is a not an American citizen (non resident alien) lives in the home country. He wants to send me a little less than $100,000 as a gift, which in term I may use to buy a house over here in the US.
    I have two primary questions:

    1) is there any specific rule or regulation I need to comply with prior to have a large sum of money transferred from overseas to US? Meaning, do I need to notify my bank/CPA/tax attorney (or anyone in that matter) before the transfer because of security / safety concerns?

    2) once the money is transferred, what is the cutoff date to file the 3250 ? Meaning, do if I get the money after April 15th, should I wait till next year’s filing or is 3250 can be filed any given time of the year?

    Any information will be greatly appreciated.

    Thanks,
    Tom

    1. Hi Tom, there is no specific tax reporting rule prior to transfer – only after the transfer has occurred (i.e. Form 3520). You may want to speak with your bank on any requirements on their end for transfers. In general, Form 3520 is due on the date that your income tax return is due, including extensions.

      If you would like a quote for your 2014 tax return, please click on the link below for a free quote or a free 30-minute consultation to discuss your situation further:
       
      http://www.taxsamaritan.com/home/getting-started/tax-quote/

      All the best,
      Randall

  19. Hi, I am a usa citzen and my parents are not. They purchased a property on my name in Brazil. Do I need to claim the property? If I decided to sell and bring the money to USA is any tax implications…when they bought the cost was around $60,000 (2012)and If I sell and transfer the money to USA now it is around $100,000

    1. Hi Nat, in general, a foreign gift of property received by a U.S. person from a foreign person that the recipient treats as a gift is excluded from gross income in the year received. A “foreign person” is a nonresident alien individual or foreign corporation, partnership or estate.

      You must file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if, during the current tax year, you treat the receipt of money or other property above certain amounts as a foreign gift. Include on Form 3520 if the gifts are valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate).

      When the property is sold, it will be a reportable transaction as a capital gain/loss.

      All the best,
      Randall

  20. Hi Randall,

    I’m an international student just graduated and started work. My family brought me some cash(about $25,000) when visiting me. Can I deposit the cash directly into the bank? How should I report as foreign gift if needed?

    Thank you!
    Alex

    1. Hi Alex, as a recipient of a cash gift, it is not a taxable event. However, it could be a reportable event on Form 3520 if you receive more than $100,000 in foreign cash gifts during a calendar year.

      All the best,
      Randall

  21. I had a question. I am thinking of gifting my brother who is in the US downpayment for our family home. I am a US citizen currently living outside the US. I wanted to know if my wife and I gift my brother $100k, what are the tax implications? My wife currently doesn’t work. From what I understand from Form 709 instructions, $100k – $28000 = $72000 would be split between my wife and I because we are splitting the gift. Since the life time credit we each have is about $2 million, we wouldn’t owe any gift tax but we would each have to fill out form 709.

    1. Hi Salman, the general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, gifts that are not more than the annual exclusion (combined annual exclusion when splitting the gift between spouses) for the calendar year (or available lifetime exclusion).

      Nevertheless, the Form 709 would be required to be filed.

      If you would like a quote for your 2014 tax return (or prior years) and the preparation of your Form 709, please click on the link below for a free quote:
       
      http://www.taxsamaritan.com/home/getting-started/tax-quote/

      Best regards,
      Randall

  22. Hi Randall

    I am an American Citizen, my wife is a Chinese Citizen with a Green card. We are about to buy a house with the help of her parents who are Chinese residents, they will be gifting her $250,000 U.S. Dollars. at first the house and Mortgage will be in her name do to Credit issues, so the gift would be to her as well. what would the tax and filing implication be in a case like this for myself and my wife?

    Thank you
    Jason

    1. Hi Jason, if the donor (your wife’s parents) are a “foreign person” (not a US citizen or green card holder), cash gifts from parents are not taxable.

      As a Green Card holder, a person is considered a U.S. tax resident and must report all worldwide income to the IRS. If the Green Card holder receives a gift from his or her nonresident alien parents, the Green Card holder may be required to file Form 3520 with the IRS based on meeting the reporting threshold.

      While foreign gift tax may not be due by the donee (her parents), a gift from a “foreign person” does need to be disclosed to the IRS if it exceeds certain thresholds. A green card holder is subject to the same filing requirements as US citizen and would be required to report the gift if the thresholds are met (more than $100,000). A Form 3520 is required to be filed with the recipient’s tax return if it exceeds this threshold. Form 3520 is simply an information return and is due on the date that your income tax return is due, including extensions.

      http://www.taxsamaritan.com/tax-preparation/foreign-gift-tax/

      Best regards,
      Randall

  23. Randall,
    My wife is an American citizen. Her mother and father are both US Resident Aliens but have never lived in the USA. They took US RESIDENCE only to visit their daughter twice a year and to possibly escape turmoil in Egypt in the event things got unbearable for Christians there during the most recent uprisings. Her father wants to put all of his assets into his two daughters names. In the event of his death one day and she inherits cash, jewellery and property, will she have to pay any type of tax or just report it? If she would be required to pay an inheritence or gift tax because of their current residency status, could they “give back” or “denounce” their residency now to avoid my wife ever having to pay such a tax. They never intend on moving to the USA, the US Residnce status was only an insurance policy if they absolutely needed it.

    Thank you,

    Nick

    1. Hi Nick, as a recipient of a cash gift or inheritance, tax (such as gift tax) would not be due. However, when property is sold, tax may be due based on the capital gain/loss on sale. Tax may be due from the parents depending on their tax residency status with the US upon the granting of a gift or from their estate.

      Best regards,
      Randall

  24. Is there an exception to filing the form 3520 if the gift (coming from a nonresident alien) is of U.S. money already in the U.S. to a U.S. citizen?

  25. Dear Brody ,
    I had a question regarding gift tax. I am working on H1B visa and my green card application is in process (I-140 approved) My father, resident of India would like to give me a monetary gift. Do I have to report this gift on Form 3520?
    Will there be any tax liability on me if I am considered as a foreigner working in USA?

    Thanks in advance

  26. I am green card holder ,residing in usa.
    My mother & father both lives in india
    Each want to give gift incash in my NRO account maintain in india
    FMV equal to $14000 from each of them ,total $28000
    My question I have to report on form 3520?
    I have to report only on FBAR electronically befor June 2015,is details of my parents required while filing FBAR

    1. Hi Ashok, a foreign cash gift requires disclosure if more than $100k. However, if your foreign account holdings in the aggregate are USD $10,000 or more based on the highest value of each account during the year, then the FBAR (FinCen Form 114) disclosure will be required.

  27. Hi,

    If my brother who is not a US citizen or Green Card holder but is residing in the US with a valid visa and gifts me money for a down payment on a house will that we considered a taxable income of me. I am a green card holder.

    And if the gift amount is less than 100K do I need to submit FORM 3520

    Thanks!
    Monit

    1. Hi Monit, your brother may be considered a US tax resident depending on how long he has been residing in the US. If so, he would be considered as a US taxpayer for purposes of the gift tax rules. While the Form 3520 may not be required on your end, he may be required to file a Gift Tax Return (Form 709).

      Best regards,
      Randall

  28. Hi Randall,

    If I am receiving a cash gift from my grandfather who is a non-resident alien of an amount around $1mm to buy a house here in the U.S., I understand i will have to file form 3520, however, due to the large amount will there be tax implications for myself? As in, is there a maximum amount of gift for non tax implication after which the U.S. will then have to tax?

    Thanks,
    Yvette

  29. Hi Randall,

    Quick question — what if I get a no-interest loan from family members located in Canada? Are there any tax implications or filing requirements there? I will receive the funds from family and return the exact same amount back to them within the year.

    Thank you.

  30. Dear Randall.

    You say that the aggregation of gifts lower than $100,000 occurs only when the donors are related and I quote: “For example, if you receive a gift of $75,000 from nonresident alien individual A and a gift of $40,000 from nonresident alien individual B, and you know that A and B are related; you must aggregate the amounts and complete Form 3520.”

    But in your answers you say that aggregation is required irrespective of anything else and I quote “Hi Silvia, if in aggregate gifts exceed USD $100k, the Form 3520 would be required.” Which on is true?

    Thank you.

    Nicos

  31. Hi Randall, if my parents (non-resident alien) wants to send me 200k for me to manage for them, is this considered a “gift” and needs to be filed on the Form 3520?

  32. Few of my relatives overseas will be helping me with the down payment for the home I will be purchased.

    My understand is, when you receive gift in cash from a foreigner, you will not be taxed. However, you need to submit form 3520 to report such gifts if the amount exceed $100000.

    My question is, do you file 3520 if the TOTAL gift received from different people of the year exceed $100000 or you only need to file if individual gives more than $100000?

    For example, If person A gives me $75000 and person B gives me $50000. Do I have to file 3520?

    I am a little bit confused with the instruction given on form 3520.

    Hope you can help. Thanks!

  33. I’m a US citizen due to receive gifts from my mother who is a US citizen living in the UK. Is she considered a foreign person? Would I need to file a form 3520 and would there be any tax implications?

    1. Hi Sara, US citizen would never be considered a foreign person for U.S. taxes including for determining filing rules for the Form 3520. As a US citizen, gift taxes and the gift tax return would be required in excess of the annual gift tax exclusion.

      Randall

  34. I would like to know how much money as gift can my wife who is a US citizen can get from her father who is an Indian citizen . what is the limit on the amount as gifts per year without paying taxes or reporting to IRS from parents who are non USA Alien or citizen?
    Thanks

  35. Hi,
    Do I have to give tax if I want to give 1 million to may parents as gift who they are not US citizen and living outside the US (middle east) ?
    Thankd

    1. Hi Sarah, a gift tax return (Form 709) must be filed for any gifts that exceed the annual exclusion amount. The amount of tax due is determined based on completing the Form 709.

      Best regards,
      Randall

  36. Hi,

    What happens if you are late on filing form 3520 for this year? Is it still possible to submit the form without a penalty?

    Thank you

    1. Hi Rod, if you are late in filing, there is a risk of a penalty being assessed. Nevertheless, if you haven’t filed it is still recommended that you file even with risk of penalty. In general, it is better a better outcome to proactively file vs. reactively file in response to an IRS notice.

      Best regards,
      Randall

  37. Dear Mr Broody,

    My parents are Croatian while I have US citizenship. They want to gift me some money (less than $100,000). If they wire the money to me will I have to report it immediately (since it is over $10,000) or and will it count towards my gross income.

    Thank you!

    1. Hi Arsen, my area of expertise is limited to taxes and I can’t respond in regards to currency transaction reporting. However, cash gifts are not reportable as taxable income, but when gift thresholds are met, disclosure reporting is required on Form 3520.

      Best regards,
      Randall

  38. Hi,

    My question is on gifting someone in India. Am a US Citizen and send money as gifts to my parents in India. Can I consider this amount as gifts and claim as a deduction?

    Thanks
    Rswamy

  39. Hi,

    I am a US citizen and I received over $100,000 from my dad who is a non-resident alien. I used this money to buy a new home here in the US. Do I only file form 3520 stating that I received a monetary gift from a non-resident alien or are there any other tax implications?

    Thank you

  40. I’m a US citizen about to receive a portion of a real estate property in China from my grandmother. Does the 100,000 reporting limit apply to real estate value, and will my grandmother have to pay taxes on that gift?

    1. If your grandmother is a non-resident alien (i.e. not a US citizen, green card holder, or resident alien), then there would not be any gift or income tax due, however assuming the value is over $100,000, at a minimum the Form 3520 (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts).

      Best regards,
      Randall

  41. I am a U.S. citizen. If I borrow money from a non-U.S. person, what is the tax implication?

    Thanks!

    1. Hi Li Ning, there may be a number of tax implications.

      For example, loans to US citizens or residents from individuals residing outside the US are often exempt from the harsh imputed interest rules; however, where interest is actually paid, it is subject to strict reporting requirements.  Any interest payments must be reported on IRS Form 1042-S, Foreign Person’s US Source Income Subject to Withholding.

      A number of other tax implications may apply depending on the specifics of your tax situation. We do offer consultations to discuss the specifics of your situation. If you would like further details about scheduling a consultation, please feel free to contact us here: http://www.taxsamaritan.com/contact-us/ and provide us a list of the questions that you have and the details of your planned loan arrangement (i.e. for personal or business use, etc).

      Best regards,
      Randall

      1. I am a non resident alien but was a green card holder till 2011. i wanted to check if gifts to my children who are US citzens are tax free. cash or property outside the US

        1. Hi Renzo, taxation of your gift will be dependent on whether you are considered a foreign person for purposes of the gift. For example, if you have not formally abandoned your green card status, you may still be considered a US taxpayer and would be subject to the gift tax laws. Recipients of the cash gift themselves are not subject to taxation on the receipt of the gift; only potentially the donor.

          Randall

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