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Do I have to do paperwork for a cryptocurrency gift from abroad if it's less than $16000

Forum|Forum|3 years ago
October 3, 2022
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Hello,

My mother, who lives outside of the US (and not a US citizen), wants to gift me cryptocurrency (10000 USDT, ~$10000 market value)

Questions.

1) I'm gonna exchange USDT to USD and send USD it to my bank account. Will I need to do paperwork for this amount?

1a) If yes, will I need to provide confirmation that this is a gift from my mother?

1b) If yes, how can this confirmation look, provided my mother lives outside the US?

2) What would change if the gift was greater than $16000? Would I need to pay my normal taxes (~30%) on the part that exceeds $16000? Does this $16000 limit apply at all if cryptocurrency is received from a person living outside of the US?

3) That $16000 limit is applied to all gifts between Jan 1st & Dec 31st? So theoretically I could receive a $10000 gift on Dec 31 & $10000 gift on Jan 1 and pay no taxes?

Best answer by Anonymous_

Your mother (assuming she is a U.S. citizen) must file Form 709 if she gave you gifts totaling more than $16,000 in 2022.

See https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e314

The donee, which is you being the recipient of the gift, does not typically have reporting requirements. However, this will be dependent upon the particular circumstances (such as receiving funds from a foreign bank).

As far as your final question, yes, you could receive up to $16,000 on December 31st and another $16,000 on January 1 without having to file a gift tax return.

A

Anonymous_Answer

Employee

Your mother (assuming she is a U.S. citizen) must file Form 709 if she gave you gifts totaling more than $16,000 in 2022.

See https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e314

The donee, which is you being the recipient of the gift, does not typically have reporting requirements. However, this will be dependent upon the particular circumstances (such as receiving funds from a foreign bank).

As far as your final question, yes, you could receive up to $16,000 on December 31st and another $16,000 on January 1 without having to file a gift tax return.

Z

zzz2Author

Thank you. I should have mentioned, she's not a US citizen though.

A

Anonymous_

Employee

@pk12_2 - re the foreign component?

P

pk12_2

Employee

@zzz2 , having read through your post and agreeing with @Anonymous_ 's response, the only questions are :

1. What if the donor is a foreign person ? In such a case there is no requirement for foreign person to report the "gifting" transaction to the USA authorities at all.

2. What if the source of the gifting by the donor is US i.e. the assets ( stocks bonds, crypto or other non-immovable asset is from US sources/ connected )? Even then there is no requirement for NRA to report the gifting because gifting amount above the yearly free limit affects the donor's lifetime free estate limit. However, it would be prudent to keep track of the disposition of all the US sourced / connected assets -- because any gains are taxable to the USA.

3. Does the donee ( the beneficiary of the gift ) if a US person have any reporting requirements ? There is reporting requirement at a threshold of US$100,000 or above using form 3520 along with your yearly return. There is no taxation. However, the basis of the gift to the donor is the same as that of the donee and any gain/ loss at disposal must be recognized. The holding period also transfers i.e. all the characteristics of the asset transfer from the donor to the donee.

4. Note also that while the donor ( a foreign person ) had no requirements under FBAR and FATCA regs, the donee ( a US person ) is fully under the FBAR and FATCA requirements/rules.

5. A cautionary note -- a US donee cannot legally receive gifts or have transactions with foreign persons/ entities/ countries/ regimes sanctioned by USA directly or indirectly.

Does this answer your query? Have I missed something ?

pk

@Anonymous_