# US gift before UK move



## Nagetton (Oct 20, 2021)

If a cash gift is given from a US parent to a US child of, let's say $1MM, it should be tax free as it's under the lifetime allowance. But am I correct in assuming that if the next year the child moves to the UK, becomes a resident, and the parent dies within 7 years there will be no IHT tax due? It seems nothing would need to be reported as the gift was given before the UK was involved at all?

Is this correct or am I understanding it wrong?

Thanks!


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## 255 (Sep 8, 2018)

@Nagetton -- The exclusion for reporting gift taxes in the U.S. is $15,000.00 for 2021. Anything larger must be reported: https://www.irs.gov/pub/irs-pdf/f709.pdf . Your gift (larger than $15K,) will be deducted from your lifetime exclusion ($11.7 MM.)

The current estate tax exemption, in the U.S. for 2021 is also $11,700,000.00, but "sunsets" 31 December 2025, returning to $5.49 MM. President Biden's agenda calls for further reducing the estate/gift tax exemption down to $3.5 MM, with a 45% tax rate. Who knows what will finally get passed in the reconciliation bill! Currently, if you die within 7 years (the 7 year rule,) your $1 MM gift will be clawed back for estate tax reporting purposes -- your child moving to and becoming resident, in the UK, or anywhere else, doesn't come into play. Once you make the gift, it will be part of your child's estate, not yours (not withstanding the 7 Year rule.) 

Estate taxes are reported: https://www.irs.gov/pub/irs-pdf/f706.pdf . If you live past 7 years -- no issues and no taxes owed on the gift (although, it will be included in your lifetime gift limit forever,) depending on your estate size. Also, if your estate is under the lifetime limit, no taxes, but your executor would still need to file. As I'm sure you know, the lifetime gift and estate taxes are tied together. Cheers, 255


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## Nagetton (Oct 20, 2021)

Thanks 255, very helpful!


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