Bank Transfers between spouses (both non-US citizens) - Gift Tax applicable?

[question_tax2025]

When we were closing a home, my bank agent had to transfer (260 K) from my wife's bank account to my bank account and then send the combined amount as a single wire transfer to my escrow.

My question, both myself and my wife are not US citizens but are on work visas and US residents (pass the substantial presence test).We file the taxes jointly.

Can someone please let me know if we would incur any tax on the bank transfer from my wife's account to my bank account?

[DoninGA]

Funds transferred between spouses is not reported on a tax return. 

[question_tax2025]

Thanks.Are there any exclusions for non-US citizens?

I found few threads mentioning if they are non-US citizens,they have a maximum of $190,000 after which they incur taxes . Is that true?

Source link : https://www.morganlewis.com/pubs/2024/10/irs-announces-increased-gift-and-estate-tax-exemption-amoun....

[question_tax2025]

I also found this on IRS website.Kindly clarify

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

[DoninGA]

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@question_tax2025 wrote:

Thanks.Are there any exclusions for non-US citizens?

I found few threads mentioning if they are non-US citizens,they have a maximum of $190,000 after which they incur taxes . Is that true?

Source link : https://www.morganlewis.com/pubs/2024/10/irs-announces-increased-gift-and-estate-tax-exemption-amoun....

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As legal US residents that would not apply.

However, I will page our expert on non-citizen issues for assistance.  

@pk Your opinion please 

[guywong]

Since both of you are in the U.S. working, do you and your wife qualify as U.S. residents for income tax purposes due to physical presence?  And if the house is under both names, you and your wife, there may not be any "gift" involved.  The transfer may just be for banking convenience purpose only.

Take a look at this IRS link:

Substantial presence test | Internal Revenue Service

[question_tax2025]

Thanks.

Yes, we qualify  as U.S. residents due to physical presence and yes, the house is under both our names.

[Mike9241]

Gifts to your spouse. You must file a gift tax return if you made
any gift to your spouse of a terminable interest that does not
meet the exception described in Life estate with power of
appointment, later, or if your spouse is not a U.S. citizen and the
total gifts you made to your spouse during the year exceed
$185,000.
You must also file a gift tax return to make the qualified
terminable interest property (QTIP) election described under
Line 12. Election Out of QTIP Treatment of Annuities, later.
Except as described earlier, you do not have to file a gift tax
return to report gifts to your spouse regardless of the amount of
these gifts and regardless of whether the gifts are present or
future interests

[question_tax2025]

Thank you.

So, just to confirm, in my case,Should I or Should I not file a gift tax return ?

[guywong]

My take is "no".  The transfer was not a gift subject to gift tax.  

You are taxed as a U.S. person so you follow the rules for U.S. persons.  Interspousal transfers are not taxable gifts for U.S. persons.  

And since the house is in both of your names, even without considering interspousal transfers, it's just for convenience purposes only.  I suspect you and your wife could have wired separate amounts to the escrow agents, but that might incur more bank fees.

[question_tax2025]

Thanks.Can I safely assume that I don't have to worry about Gift Tax for transfers between my spouse accounts ?

Can someone clarify if you disagree with my above statement?

[pk]

@question_tax2025  having gone through this whole thread and generally agreeing with 

(a) that there is a "taxable gift" amount  specific to   Spousal gifting where donee/ recipient  is  Non-Resident  per section 2523 and follow-on section.

(b) that the current  situation described  is NOT a gift ( absent a donor  spouse quit claim declaration or other such in-effect documentation)  from one spouse to another . It is merely  a  pooling of bank interest between the spouses for ease  of joint purchase.

(c) State laws as to marital property and/or community property needs to be taken into consideration.

Is there more one of us can do for you ?

pk

[question_tax2025]

Thank you.That clarifies.One last question from your answer above

<< (a) that there is a "taxable gift" amount  specific to   Spousal gifting where donee/ recipient  is  Non-Resident  per section 2523 and follow-on section. >>

In my case, we would be tagged as " residents" and hence excluded from that taxable gifts, right?