Employee

Question

Do I need to pay tax with foreign wire transfer received from parents (non-US residents/citizens) living in another country?

Forum|Forum|7 years ago
June 1, 2019
8 replies
0 views

They sold their house and want to gift me that money. Tax was paid to the government over there by my parents. Do I need to report this money to IRS? Is it considered income or just a gift? Is there a limit of how much money they can send me annually before IRS taxes me? My bank is clueless about this. Thanks for your help.

DoninGA

Employee

If the funds received from an individual are not loans or they are not payment for services rendered, then they would be gifts. Gifts are not reported on a federal tax return, regardless of the amount received.

Since the gift is from a foreign person, if the gift received during the year is $100,000 or more you will need to report the gift received to the IRS using Form 3520. The form 3520 is an informational form only not a tax return.

IRS Form 3520 - https://www.irs.gov/pub/irs-pdf/f3520.pdf

IRS Form 3520 instructions - https://www.irs.gov/pub/irs-pdf/i3520.pdf

H

hammoudialaa

Even if that money is support for eduction? My family overseas send me money to help with college and living expenses, is this also considered a gift and must be reported in the same way using form 3520?

DoninGA

Employee

If you receive the funds directly from a foreign person then it is not relevant for how the funds are used. It is not taxable income to you and not reported on your tax return since it is a gift.

If the amount received from the foreign person is in excess of $100,000 for the year then you are required to report the funds received using IRS Form 3520.

T

trics95

hi, my parents both live outside of US(non citizen, residence). 8 years ago my mother opened an account with me as the beneficiary, so i take care of the account for her. due to certain event, they are thinking about transferring their life savings over here, so here's my question:

the transfer will be a large sum, they are wondering if they will need to pay taxes after the money gets in the account. maybe not them, but since my name is on the account as well, would i have to pay any taxes on that?

SusanY1

The transfer of funds to you, itself, is not taxable. However, if the transfer exceeds $100,000 (U.S.) and it is being deposited into an account in your name only, it would be a reportable gift from a foreign person.

However, it should not cause any tax due (unless your parents are in a very small group of "covered expatriates", which doesn't seem like it applies here.) You can learn a bit more about that reporting here: Gifts from Foreign Persons.

After the money is transferred, any income that it generates in the form of interest, dividends, or capital gains is taxable income to you.

@trics95

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

M

MB1982

Is the limit of receiving a sum $100,000 per year by US resident, from a single foreign person ? Can 2 or more foreign persons send $100,000 each to a single US resident ( in which case the US resident gets ~$200k from 2 foreign nationals from abroad ) ?

Also, what is the $15,000 limit about ? Is it for receiving or giving gifts by US resident? How is it different from $100,000 limit ?

H

Herbert570

Following the question, I need to return the gift fund my parent sent me from overseas (>$100,000 and but is around that value) for some reason, do I have to pay gift tax because I send it back without asking for any obligation? I’m a permanent resident of US while my parents are Taiwanese citizen without any affiliation to the US.

If later they send the money to me again through two wire transfers (each around $50,000) for the Taiwanese gift tax exemption purpose, would that be ok with IRS and should I file a total of three 3520 forms for the first and the latter two transfers?

hi @SusanY1, could you help me answering the questions above?

K

KRM_444

Hello all,

I have a quick question:

Suppose a parent in Kenya, Africa is going to send their child in America $500k-1M. The parent is not a US citizen, but the child is a US citizen. What are the tax implications for both parties? Should the parent send it as a “gift” or not, and why?

I did some googling and it said that is you are a US citizen and you are receiving $$ from a parent who is NOT a US citizen, then you do not have to pay taxes. However you will need to file a 3520.
I couldn’t find any information about being a resident in Kenya, Africa from PWC (informations unavailable)..

DoninGA

Employee

@KRM_444 wrote:

Hello all,

I have a quick question:

Suppose a parent in Kenya, Africa is going to send their child in America $500k-1M. The parent is not a US citizen, but the child is a US citizen. What are the tax implications for both parties? Should the parent send it as a “gift” or not, and why?

I did some googling and it said that is you are a US citizen and you are receiving $$ from a parent who is NOT a US citizen, then you do not have to pay taxes. However you will need to file a 3520.

I couldn’t find any information about being a resident in Kenya, Africa from PWC (informations unavailable)..

Since your parent is not a US citizen or US resident alien and not living in the US they have no obligation to report the gift to the IRS.

As the recipient of the gift you do Not report the gift on a US tax return, regardless of the amount received. However, since the gift is from a foreign person you must report the gift received to the IRS using Form 3520 if the gift received is more than $100,000.

K

KRM_444

Thank you very much for the quick turn around!

H

HKJ1985

I am a greencard holder, and would like to transfer personal funds from my German bank account to US bank account. It’s below $100k. Is personal funds considered taxable income? Or more considered a gift and is therefore non taxable? Also, is it best to transfer everything at once, or in weekly increments of less than $10k?

thanks for clarifying!

D

DanaB27

No, when you transfer personal funds from your own account this is not taxable income.

In regards to the tax law, it will not matter if you send one amount or multiple smaller amounts.

@HKJ1985

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

T

tina07

Does this transfer needs to be reported to the IRS? or not at all?

(I'm also planning to move some money from my foreign bank account to my US Bank account.)

Thanks!

A

AlyssaO

i need some advice…My mom (Thai citizen) transferred me money as a gift about $99,000 to my bank account in USA (i am permanent resident, greencard) but on a transfer bank document, she put as family support because transfer as gift cannot be over $50,000. Do i need to report IRS or pay tax for this this amount $99,000 as family support money? Please advise, thank you.

V

Vanessa A

No, you do not need to pay tax on the money you received from your mom.

You may need to complete Form 3520 or report this if the following apply:

You are the responsible party for reporting a reportable event that occurred during the current tax year, or you are a U.S. person who transferred property (including cash) to a related foreign trust (or a person related to the trust) in exchange for an obligation or you hold a qualified obligation from that trust that is currently outstanding.
You are a U.S. person who, during the current tax year, is treated as the owner of any part of the assets of a foreign trust under the rules of sections 671 through 679
Your aggregate gifts were more than $100,000

Edited 3/11/2022 @ 8:32AM PST @AlyssaO

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

A

AlyssaO

Thank you for your advice.

W

whiteebony

Thanks for all the info here.

I have a similar situation where my parents who are citizens living abroad and need to wire a large sum of money to me, a US citizen. I would assume that wire transfer needs to be reported using the same form, but is the amount taxable?

Or how about if the money is deposited into a joint account where me and parents are account holders, accessible in the foreign country as well as the US. Do we still have to report that amount, and taxable?

Thank you so much in advance!

DaveF1006

Since your parents are US persons, they would need to file a 709 gift tax return if they re "gifting" the money out of their foreign bank account into yours. If it is a joint bank account, then there is no gifting regulation since it is strictly a transfer of money between accounts.

The money that is transferred is not taxable but is reported by both the sending and receiving banks. Banks must report all wire transfers over $10,000 using a Currency Transaction Report (CTR) and submit it to the Financial Crimes Enforcement Network (FinCEN). You do not have a reporting requirement on your part as this is done strictly within these banks. If there is a issue, the treasury agents will not be shy in contacting you for further information.

As far as FBAR and form 8938 considerations, please review Vanessa A comment in this thread. This is a very important regulation that cannot be overlooked.

@whiteebony

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

W

whiteebony

Thank you so much @DaveF1006!

Regarding FBAR and form8938, why does it apply to my scenario? The joint account i have with parents actually is a US bank, only need to be concerned about FBAR if its a foreign bank correct?

Also, i tried to search irs for my original question about wiring large sum of money and whether taxable but couldnt find any info. Is there a government link you know of so i can show my parents? They are very paranoid about being taxed and just want something concrete giving them more assurance. I had the same understanding as what you posted but they didnt trust me when i told them lol….

W

WebleyCole

Question: I am a US resident living in Colorado. I have an opportunity to be a 1099 contractor to a company based out of Singapore, but with bank accounts in Hong Kong. I would be paid as a contractor here in the US by way of bi-weekly wire transfers from Hong Kong (currently part of the People Republic of China). What tax or legal considerations should I be aware of under this arrangement?

M

Mike9241

the income would be taxable in the US and you would file schedule C. you would also owe self-employment tax on the net income. it would seem you have no control over the foreign account your payments would be made from so you would have no foreign account reporting.

to avoid penalties for underpayment of your estimated taxes you would need to start making estimated tax payments.