# Tax on gift given to non U.S. citizen?



## P123 (Dec 2, 2015)

Hi all,

I am familiar with the 3520 and the steps that need to be taken when you receive a gift from a foreign person. However, what is the case in the reverse?

Do I have a tax liability if I give a gift to non-U.S. citizen who lives outside of the U.S.?

Thanks for any tips you may have


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## Bevdeforges (Nov 16, 2007)

If the gift is over the limit (something like $14,000 in a single year), you need to file a gift tax return. But generally speaking, there is no tax due on the filing of the return. It's just that if you die shortly after making the gift, the amount of the gift is considered part of your estate and the "gift" then subject to tax as if it had been a bequest.

https://www.irs.gov/businesses/smal...ift-taxes?_ga=1.61690213.899109455.1460720240
Cheers,
Bev


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## P123 (Dec 2, 2015)

Thanks for your reply Bev.

Am I correct that if the gift is above $14,000 (per year) one has to file a a gift tax return--however, taxes are only due if the gift is above the lifetime exclusion of $5.45 million?


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## Bevdeforges (Nov 16, 2007)

Philipp123 said:


> Thanks for your reply Bev.
> 
> Am I correct that if the gift is above $14,000 (per year) one has to file a a gift tax return--however, taxes are only due if the gift is above the lifetime exclusion of $5.45 million?


That's how I understand it. I've only ever filed a gift return once - and there were no taxes to pay, just the return to file. (Filed it for my father, who transferred some money to me. His net worth at that point was so far under the lifetime exclusion that that was the end of it. When he died, there wasn't enough left to even bother with probate, so the gift tax return was simply one of the CYA formalities.)
Cheers,
Bev


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## Adam_McG (Oct 7, 2020)

I hope someone can clarify this matter to me. 

My parents are non US citizens that wants to send me money in installments periodically to my foreign bank account. I am a US citizen living and working to a foreign employer overseas. Are there any taxes that I have to pay? Is there a cap on how much they can support me? Which form if any should be used to report this? 

Would it make a difference if I receive the money in cash or being wired to my bank account? The main reason to receive the money cash is to save the wire transfer fees since it is going to happen frequently.

Another question in regards to fatca form 8938. I could not understand the difference between deposit and custodian accounts. I have checking / savings accounts that i use for my expenses and where my salary is being deposited. Is that considered a deposit account or custodian account per the 8938 form. These accounts generate interest. Is that the only thing that I report on 8938 or there are other items that need to reported?


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## Bevdeforges (Nov 16, 2007)

First of all, on the form 8938, the fact of your living overseas means that the threshold for your having to file gets raised (fairly significantly). Check this site : https://www.irs.gov/businesses/corp...atement-of-specified-foreign-financial-assets
especially this part:


> If you are a taxpayer living abroad you must file if:
> 
> You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year;


Whether or not you have to pay tax on the money your parents are sending you depends on the nature of the payments. If the money is a gift, then you may have to declare the gift but the payment of taxes will depend on the gift tax laws and restrictions in the country where your parents live. (Many countries have a threshold for how much parents can give their children before the transaction becomes reportable or taxable.)

In general, most bank accounts (checking and savings, at least) are "deposit" accounts. Custodial accounts are where a financial institution is holding something like stocks and bonds for you and trading in your name.


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## Adam_McG (Oct 7, 2020)

Based on the thresholds you mentioned, It seems that I will need to file 8938 form. The account(s) are generating interest nothing else. Is the interest the only income that I report on form 8938? Anything else I am missing?

For my parents money, they simply want to give me money to support me financially, for me to save it and invest it. They do not need this money back from me, so it is basically a gift. 

Do I need to report this on my tax filing or declare this to IRS somehow no matter how small or big the amount is? Any requirements or documents needed to prove / show that this a gift?


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## Bevdeforges (Nov 16, 2007)

Regarding the gift from your parents, you need to check the instructions for form 3520: https://www.irs.gov/forms-pubs/about-form-3520

The 8938 form is for reporting financial assets (i.e. how much you have in the accounts - highest balance, I believe they are asking for). The income these assets produce (interest, dividends or other earnings) need to be declared as part of your regular 1040 income tax return each year. https://www.irs.gov/instructions/i8938#idm139680171301280


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## Moulard (Feb 3, 2017)

Adam_McG said:


> Do I need to report this on my tax filing or declare this to IRS somehow no matter how small or big the amount is? Any requirements or documents needed to prove / show that this a gift?


You only need to report a gift from a non-resident alien individual if it is more than $100,000 USD. If it is less than that, then it does not need to be reported.

If you are not doing so already, depending on the size of the gift you may cross filing thresholds for FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). and Form 8938, Statement of Specified Foreign Financial Assets.


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