Question

Does the basic credit amount in Form 709 apply to gifts made to non-citizens?

Forum|Forum|4 years ago
April 6, 2022
1 reply
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In Form 709, Part 2 (Tax computation), Line 7 - does the basic credit amount of $4,625,800 apply if the gift was made to a non-citizen? Because on page 3 of the instructions for form 709, it says: "Note. Only the annual exclusion applies to gifts made to a nonresident not a citizen of the United States. Deductions and credits are not considered in determining gift tax liability for such transfers". This seems to indicate that the credit on line 7 must be ZERO if the recipient is non-citizen. Is that correct?

R

RobertB4444

No, the gift tax exclusion applies to gifts made to non-citizens. However, gifts made in foreign currency have their own issues. I suggest you consult a tax professional in your area familiar with these things in order to avoid reporting issues.

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M

maantxusaAuthor

Thank you for quick response. Could you please explain your reasoning for why the credit is applicable? Am I misreading the note on page 3 that I referenced in my question? Thanks again!

DawnC

Employee

Gifts to foreign citizens receive the same treatment as gifts between U.S. citizens. Any gift exceeding the $15,000 annual exclusion amount must generally be included on a gift tax return. If the gift is to a noncitizen spouse, there is an annual limit.

The rules for recipients are different regarding reporting. While foreign citizens usually will not have any gift tax liability for receiving a gift, recipients are required to report a foreign cash gift under certain circumstances. The thresholds for reporting are different depending on whether you are receiving gifts from nonresident aliens or from foreign corporations. The failure to report in any case can result in IRS penalties.

IRS Gift Tax FAQs - Nonresidents - The info in this link may help!

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