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

[hton17]

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]

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

[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]

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.

[sfran]

Overseas wire transfer less than $100,000 does not have to be reported to IRS, correct? It doesn't matter if its family or not. But its always best to fill out 3520, to be safe with IRS correct? But what about the gift amount limit like $14000 per year limit?

thank you for your time 

[DoninGA]

You have to file a Form 3520 if - https://www.irs.gov/pub/irs-pdf/i3520.pdf

You are a U.S. person who, during the current tax year, received either:
a. More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons
related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or
b. More than $16,076 from foreign corporations or foreign partnerships (including foreign persons related to
such foreign corporations or foreign partnerships) that you treated as gifts.

If this does not apply to you it is not necessary to file a 3520.

Gifts received from an individual are not reported on a tax return, regardless of the amount received.

If the giver of the gift is a US citizen or US resident then they are required to report the gift given on an IRS Form 709 if the amount given to a single individual in a year is more than $15,000.

The giver of a gift does not report the gift given on a tax return.

[mmcguinness]

What is the funds received from an international person/company are for services rendered? (services were provided by U.S. citizens while in a foreign country). 

[DoninGA]

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@mmcguinness wrote:

What is the funds received from an international person/company are for services rendered? (services were provided by U.S. citizens while in a foreign country). 

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You report that income on a Foreign Earned Income Form 2555.  Form 2555 is included with your personal tax return Form 1040.

See this TurboTax support FAQ for a form 2555 - https://ttlc.intuit.com/community/forms/help/what-are-forms-2555-and-2555-ez-used-for/01/26046

[rzhang63]

Hi,

I'm an international student studying in the US.

I'm not a U.S. citizen or a resident alien. Do I still need to report the money my parents sent me as gift to IRS?

Thanks! 

[DoninGA]

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@rzhang63 wrote:

Hi,

I'm an international student studying in the US.

I'm not a U.S. citizen or a resident alien. Do I still need to report the money my parents sent me as gift to IRS?

Thanks! 

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No.  Gifts received from an individual are not reported on a tax return, regardless of the amount received.

[ravalraj]

I'm a resident alien (Green Card), and received money from my parents who live in Kenya, and have Kenyan citizenship. They wired $116K which is above the 100K threshold. On Form 3520, Line 54 & 55 are rather confusing & am not sure which one i'm checking off "yes".  From my understanding I need to check "yes" on Line 55. Please could someone kindly assist. Thanks. 

[KrisD15]

Line 55 is for a gift from a foreign corporation. If this was from your parents, and not a corporation, you would select Yes to line 54 and No to line 55. 

[ravalraj]

Yes from my parent's bank account wired to mine here. 

[KrisD15]

Then that is not from a corporation. Use line 54. 

[ravalraj]

Great, Thank you! Can I ask one more question? For Line 2a, should I enter my father's name or leave blank. It asks for  " Name of Foreign Trust (in applicable)".