Large gift from a foreign person

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Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Large gift from a foreign person

Post by Starbase »

I am about to receive a large gift from my parents who live outside the US. The gift is over $100k and it looks like it has to be reported on form 3520 https://www.irs.gov/businesses/gifts-fr ... ign-person.
It doesn’t look like I will have to pay taxes on this amount. Has anyone here ever filed form 3520 and can you confirm there was no tax payable on the large gift?
Silk McCue
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Re: Large gift from a foreign person

Post by Silk McCue »

Did you read the full publication you shared? By doing so I found that if the gifts are from expats that taxes may be due, otherwise no. If you received more than $100k it appears that more detail is required on the form.

Cheers
Topic Author
Starbase
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Joined: Sun Aug 14, 2022 10:25 pm

Re: Large gift from a foreign person

Post by Starbase »

Silk McCue wrote: Sat May 27, 2023 6:08 am Did you read the full publication you shared? By doing so I found that if the gifts are from expats that taxes may be due, otherwise no. If you received more than $100k it appears that more detail is required on the form.

Cheers
Yes, it didn’t look like I had to pay taxes but just wanted to confirm with others.
My parents have never lived in the US so there’s no expat situation there.
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HueyLD
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Re: Large gift from a foreign person

Post by HueyLD »

Starbase wrote: Sat May 27, 2023 12:51 am I am about to receive a large gift from my parents who live outside the US. The gift is over $100k and it looks like it has to be reported on form 3520 https://www.irs.gov/businesses/gifts-fr ... ign-person.
It doesn’t look like I will have to pay taxes on this amount. Has anyone here ever filed form 3520 and can you confirm there was no tax payable on the large gift?
Neither you nor your parents owe any tax to Uncle Sam.

However, you need to file form 3520 by the filing deadline as failure to file can result in HUGE penalty.
gavinsiu
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Re: Large gift from a foreign person

Post by gavinsiu »

Couple of point to consider
* You do not have to report gifts under $100K in the year.
* The $100K is per year. If you do a bunch of transfer that end up total over $100K, you will have to fill out form 3520. The form only reports that you got more than 100K but there is no tax. It is just a reporting requirement.
* Be careful of receiving money from a foreign partnerships. They have a lower limit.
* Also be careful of gifts from US situs source, which has a lower exclusion. For example, let's say your parents owe some US assets and just transfer them to you.
* I am assuming that your parents are not US Citizens. For US citizen, the us tax law still applies if they move overseas. If one of your parents is a US Citizen, make sure the money comes from an account of the non-US citizen and not a joint account.
TedSwippet
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Location: UK

Re: Large gift from a foreign person

Post by TedSwippet »

gavinsiu wrote: Sat May 27, 2023 11:16 am Couple of point to consider
...
* I am assuming that your parents are not US Citizens. For US citizen, the us tax law still applies if they move overseas. If one of your parents is a US Citizen, make sure the money comes from an account of the non-US citizen and not a joint account.
Also, for completeness:

* US tax on direct or indirect gifts and bequests from some former US citizens or green card holders. Flat 40% rate, levied on and payable by the recipient.
Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Re: Large gift from a foreign person

Post by Starbase »

gavinsiu wrote: Sat May 27, 2023 11:16 am Couple of point to consider
* You do not have to report gifts under $100K in the year.
* The $100K is per year. If you do a bunch of transfer that end up total over $100K, you will have to fill out form 3520. The form only reports that you got more than 100K but there is no tax. It is just a reporting requirement.
* Be careful of receiving money from a foreign partnerships. They have a lower limit.
* Also be careful of gifts from US situs source, which has a lower exclusion. For example, let's say your parents owe some US assets and just transfer them to you.
* I am assuming that your parents are not US Citizens. For US citizen, the us tax law still applies if they move overseas. If one of your parents is a US Citizen, make sure the money comes from an account of the non-US citizen and not a joint account.
Correct, they’re not US citizen or green card holders
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