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Yu28
New Member

1040 Schedule B line 8 and form 3520

I received gift money from my father and brother who are non US residents,

1. Do I need to mark "Yes" on Form 1040 Schedule B Line 8.  The money I received is not  from a foreign Trust?

    If I need to mark "Yes", in which section I need to mention. I am using Turbotax to file my tax return.

 

2. On the Form 3520, do I check the “Initial Return” box or the “Final Return” box? Which lines do I need to fill out to report gift money received from foreign individuals?

 

Thanks,

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6 Replies
pk
Level 15
Level 15

1040 Schedule B line 8 and form 3520

@Yu28 , generally speaking, the 3520  instructions require the "initial / final" return  only for  foreign trusts.  I think you should leave it empty;

 For Schedule -B , if the gift is  from individuals then  line 8 should be NO ( check mark).

Do you need more help on this  ?

 

Yu28
New Member

1040 Schedule B line 8 and form 3520

Thank you so much. So I need to fill out only line 1a thru 1k and part IV, right?

Thanks again.

 

1040 Schedule B line 8 and form 3520

How did you receive the gifts from your father and brother?  Were they cash gifts sent to you in the U.S. via wire transfers, money orders or checks?  If so, you are correct that Schedule B should be checked "no" as long as you don't have any bank accounts overseas.  If the money still sits in some overseas banks with you as the owner, then you may be required to not only check the box on Schedule B, but may also be required to file a Foreign Bank Account Report (FBAR), Form 114 electronically with FinCEN and IRS form 8938 with your Form 1040.

 

If your father's and brother's money were sitting in some U.S. bank accounts all along, there may be a gift tax filing requirement.

 

You complete Part IV to report the gifts from nonresident alien if the total amount exceeded $100,000.

 

I'm new to TT, the easiest way to find an input screen is probably go to Schedule B and right click on the box, that should take you to the screen for you to answer Yes, and the name of the country.

pk
Level 15
Level 15

1040 Schedule B line 8 and form 3520

@Yu28 ,

do you still need more on this ?

@guywong  wrote :  "f your father's and brother's money were sitting in some U.S. bank accounts all along, there may be a gift tax filing requirement. "

This is  true if, and ONLY if, the donor(s) is/are   US person  ( Citizen / GreenCard ? Resident for Tax purposes ) at the time of gifting.   There is generally no gift tax filing  ( IRS form 709 ) for Non Resident Alien ( when not connected / sourced  to US ).

Agree with @guywong , that  depending on the facts and circumstances  you may come under  FBAR  and FATCA regs.

 

1040 Schedule B line 8 and form 3520

@pk Since we have not heard from @Yu28, we probably should wait and see exactly what s/he received from father and brother.  But here's a quote from the IRS, citing IRC 2501(a)(2) on gifts of properties with a U.S. situs.  I believe cash is considered "tangible" property, but I could be wrong.  Chances are, however, this situation may not apply to @Yu28 

 

https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax-for-nonresidents-not-citizens...

Gift Tax for Nonresidents not Citizens of the United States

For a nonresident not a citizen of the United States, the gift tax applies to the transfer by gift of certain U.S.-situated property. You make a gift if you give certain property (including money), ....

 

For nonresidents not citizens of the U.S., transfers subject to gift tax include real and tangible personal property that is situated in the U.S. However, gifts of U.S.-situated intangible property are not subject to gift tax. See IRC § 2501(a)(2). Such intangibles include, for example, stock of U.S. corporations.

 

26 U.S. Code § 2501 - Imposition of tax

(a) Taxable transfers

(1) General rule

A tax, computed as provided in section 2502, is hereby imposed for each calendar year on the transfer of property by gift during such calendar year by any individual resident or nonresident.

(2) Transfers of intangible property

Except as provided in paragraph (3), paragraph (1) shall not apply to the transfer of intangible property by a nonresident not a citizen of the United States.

(3) Exception
(A) Certain individuals

Paragraph (2) shall not apply in the case of a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer.

(B) Credit for foreign gift taxes

The tax imposed by this section solely by reason of this paragraph shall be credited with the amount of any gift tax actually paid to any foreign country in respect of any gift which is taxable under this section solely by reason of this paragraph.

 

https://www.irs.gov/businesses/small-businesses-self-employed/freque[product key removed]ions-on-gif...

Transfers of certain property, as described below, to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return is considered a transfer subject to gift tax. 

Donors who are nonresidents not citizens of the United States are subject to gift (and generation-skipping transfer (GST)) taxes for gifts made of real and 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 United States possession and acquired citizenship solely by reason of birth or residence in the possession.

Under certain circumstances, nonresidents who are not U.S. citizens are also subject to gift (and GST) taxes for gifts of intangible property. See sections 2501(a) and 2511(b).

If you are a nonresident not a citizen of the United States who made a gift subject to U.S. gift tax, you must file a gift tax return (Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return)

Yu28
New Member

1040 Schedule B line 8 and form 3520

Thank you for the explanation. The money I received was wired from the bank outside of US and from nonresident alien personal account. 

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