Question

Will either party have to pay tax?My mom(not us citizen) would like to gift me(us citizen) 40k to help us with my first bornMoney come from a US Bank owned by mom

Forum|Forum|3 years ago
March 13, 2023
1 reply
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The bank account was opened while mom was in the US accompanying my sibling for school

TurboTax Premier Online

Employee

The gift tax limit is $16,000 in 2022 and $17,000 in 2023. The gift tax rates range from 18% to 40%. The gift giver is the one who generally pays the tax, not the receiver. In your scenario though there will be no gift tax owed, they just need to file with their tax return Form 709 if they in fact gave you more than $16k.

There will be no tax due as gift taxes in excess of the annual exemption go to reduce the lifetime exemption for the estate taxes. That number is currently $12.06mm.

Now if your mom gave that money to more than 1 person say you and your spouse or your child then no filing is required. It is $16k a person so if it was for you and your child and spouse the exclusion is $48k. There are so many nuances to how to pay for something directly vs. gifting the funds. If you’re planning on making a gift to help pay another’s college costs or medical expenses, make the payment directly to the educational or healthcare institution, because that payment isn’t considered a gift.

If you would like to read more, TT has a helpful post : https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

**I don't work for TT. Just trying to help. All the best. ***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.

A

abel91740Author

@maglib

Thank you for answering such quickly

I have a few more question if you don’t mind me asking

1. when does the gift tax actually come into play? Is it after the 12 million or other scenarios may trigger this gift tax

2. my mom being a foreigner gifting me money , does it matter if the money is in the bank located in US or a bank in her country .

thank you!!

M

maglib

Employee

@abel91740

Do I have to pay taxes on a gift from a foreign person?

Reporting Requirements

For gifts or bequests from a nonresident alien or foreign estate, you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate exceeds $100,000 during the taxable year. If the gifts or bequests exceed $100,000, you must separately identify each gift in excess of $5,000.

https://www.irs.gov/businesses/gifts-from-foreign-person#:~:text=Reporting%20Requirements&text=For%20gifts%20or%20bequests%20from,%24100%2C000%20during%20the%20taxable%20year.

**I don't work for TT. Just trying to help. All the best. ***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.