nonresident not a citizen (gift tax - from 709)

[blazingboy]

From 709 instructions defines "nonresident not a citizen" as:

A nonresident not a citizen of the United States includes a person who, at the time of making the gift:
• Was domiciled in a possession of the United States,
• Was a U.S. citizen, and
• Became a U.S. citizen only because he or she was a citizen of a possession or was born or resided in a possession.

What exactly does this even mean? I don't have either U.S. citizenship or green card status but still paying taxes under resident status, so am I considered "nonresident not a citizen"? Furthermore, should I be eligible to use the lifetime gift tax credit ($11,580,000) if let's say I transfer some money to my parents back in my home country?

[ThomasM125]

A nonresident not citizen of the United States is an individual who is not a resident or citizen of the United States, or someone who lives in a US possession and became a citizen by reason of birth or because they lived in the possession.

In general, it means you don't live in the United States and you are not a citizen of the United States.

If you are subject to the gift tax rules because you are a citizen or resident or nonresident not citizen, then you would be entitled to the lifetime gift tax credit.

You would need to file a gift tax return for any year you gifted more than $15,000 to any one individual.

[blazingboy]

I am quoting from page 18 in https://www.irs.gov/pub/irs-pdf/i709.pdf

If you are a citizen or resident of the United States, you must apply any available applicable credit against gift tax ... Nonresidents not citizens of the United States may not claim the applicable credit and should enter zero on line 7.

So I guess nonresidents not citizens cannot claim the $11m credit, but resident aliens (for tax purpose) still can?

[gloriah5200]

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. 

Nonresidents not citizens of the United States are subject to gift and GST taxes for gifts of tangible property situated in the United States.

A person is considered a nonresident not a citizen of the United States if he or she, at the time the gift is made,

(1) was not a citizen of the United States and did not reside there, or

(2) was domiciled in a U.S. possession and acquired citizenship solely by reason of birth or residence in the possession.

Under certain circumstances, they are also subject to gift and GST taxes for gifts of intangible property. See section 2501(a).

If you are a nonresident not a citizen of the United States who made a gift subject to gift tax, you must file a gift tax return when any of the following apply.

• You gave any gifts of future interests.
• Your gifts of present interests to any donee other than your spouse total more than $15,000.
• Your outright gifts to your spouse who is not a U.S. citizen total more than $157,000.

[blazingboy]

So if I am a resident alien, and I gift $20000 to my father, who is a nonresident not a citizen, then I would need to pay gift tax on the extra $5000 without any possible credit?

[ToddL99]

You won't need to pay a gift tax on the additional $5000 and you may not have to file a gift tax return (Form 709).

If you are married, 1/2 of the $20,000 could be considered as coming from your spouse - in that case, each of you would be treated as making a $10,000 gift to your father, which is below the annual $15,000 gift exclusion limit.

Even if you are single, you're also entitled to a lifetime exemption from gift and estate tax. In 2020, that exemption amount jumps to $11.58 million. In this case, you'd have to file a gift tax return so the IRS has a record of your lifetime giving.

A 709 is only needed for the year of a gift over the annual exclusion amount (currently $15k) . If there is no future gift, no future 709 need be filed. Be sure to keep the 709. Also keep the address it is sent to.  (That is asked for on a 709 if it is filed).

[camfey]

When the resident alien departs the US, would the person need to pay back the amount of the gift taxes that were deducted from the lifetime exemption amount? Say I gave my father 20k in 2021, filed 709 for the 5k in 2022 for 2021 tax return, and then in 2022 I also leave US, would I need to pay back the gift taxes on the 5k I gave in 2021? 

[npierson7]

No, you won't need to pay it back. First, you are not responsible for the gift tax in that situation. Second, there is no such a provision that might require you to pay back the excluded gift taxes. 

[kvtax]

If someone is a resident but not a citizen, what should they put in citizenship box? They are a green card holder

[chipmario]

Do I qualify as "nonresident not a citizen" of the United States if I live in the US on non-immigrant visa, e.g. f1 or h1b? The form 709 has two definitions for "nonresident not a citizen":

I) A person is considered a nonresident not a citizen of the United States if he or she, at the time the gift is made, (1) was not a citizen of the United States and did not reside there, or (2) was domiciled in a U.S. possession and acquired citizenship solely by reason of birth or residence in the possession.

II) A nonresident not a citizen of the United States includes a person who, at the time of making the gift:
• Was domiciled in a possession of the United States,
• Was a U.S. citizen, and
• Became a U.S. citizen only because he or she was a citizen of a possession or was born or resided in a possession.

What does the following mean "was not a citizen of the United States and did not reside there"? Do I "reside" in the US if I am living on a non-immigrant visa? What does a resident mean here?

[DaveF1006]

To clarify, when did you enter in the US and what were the dates of your F1 and h1b visa status?

@chipmario

[chipmario]

I entered in August 2018 on F1. My H1b would begin this year in October. For federal tax purposes, I am considered as a nonresident alien. But I believe that my status will change in the future when I meet the substantial presence test. Does gift tax and filing form 709 depend on whether I am a nonresident alien or resident alien?