Hello, David. Although it is not taxable, does one still need to report it if it meets a certain threshold? I found this info below when trying to investigate further and will appreciate any feedback:
In the United States, those who receive gifts are not required to pay any gift taxes. The burden of paying the gift tax falls on the gift-giver. The same is true for those who receive an inheritance. The fact that the gift is from a foreign person is irrelevant.
Therefore, if you receive a monetary gift or an inheritance from relatives abroad, you will not have to pay taxes on it.
However, you must report the gift or inheritance to the IRS if the amount you receive exceeds a certain threshold.
WHO NEEDS TO REPORT AN INHERITANCE FROM A FOREIGN RELATIVE?
The IRS requires taxpayers to report:
Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate); or
Gifts valued at more than $16,076 got 2018 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to the foreign corporations or foreign partnerships).
DON’T TRY TO FOOL THE IRS
What if your parents abroad want to give you a monetary gift of over $100,000, but you don’t want to be burdened by the reporting requirements? Can you simply get each of them to make a gift less than $100,000 so you don’t have to report?
No. You must combine gifts from related parties. For example, if you receive a gift of $70,000 from your mom and $70,000 from your dad, who are Mexican citizens living in Mexico, you must report the gift because the combined gift totals more than $100,000.
HOW TO REPORT A GIFT OR INHERITANCE
If you receive a gift or inheritance that exceeds these $100,000, the tax laws require you to file Form 3520 at the same time as your tax return for the year you received the gift.
If you do not file Form 3520 accurately or on time, you may be subject to penalties equal to 5% of the gift or bequest for each month during which the failure continues, up to a maximum of 25%.
For more information, visit the IRS’s website by clicking here.
