Cash gift from my father-in-law to my wife (Brazil to US)

[cyberfugue]

Hello,

My wife's parents, who are citizens of Brazil want to send my wife and I a money transfer of around $100k as a gift. My wife is a naturalized US citizen who was born in Brazil, but lives in the US with me now.

The money transfer will come straight out of my father-in-law's bank account into mine and my wife's joint bank account here. I would like to know the tax implications of the money received here. Since her parents have already paid taxes on the money in Brazil, would we as receivers have to pay taxes on the gift money here as well? Will her parents have any reporting requirements to the IRS?

It would also be beneficial to know if there is a yearly limit on how much we can receive in gift money as a joint couple who share a common bank account. 

Thanks very much for any insight you can offer.

[Anonymous_]

@pk

[SusanY1]

In the United States, the tax (and reporting requirements) related to gifts are typically borne by the gift giver.  However, in the case of gifts received by a U.S. person (citizen or resident alien), the burden of reporting falls on the recipient.  

There is no tax due on a bona fide gift from a foreign person, but there is a requirement to report the gift on Form 3520 when the aggregate amount received from a person or foreign estate exceeds $100,000 per taxable (calendar) year.  This is per person, so you and your spouse would each be able to receive gifts in the amount of $100,000  before you would be required to file this form.  Note that all gifts given throughout the year count toward this annual amount, including noncash items.  

The Form 3520 is filed separately from your income tax return, and isn't found in TurboTax.  You can find it along with more information about it here: Large Gifts or Bequests from Foreign Persons.  Note that the form is used for a number of other things so most of it won't apply to you making it less complicated than it first appears.

For a direct gift as you describe you will check the applicable boxes above Line 1a, fill in the identifying information that applies to you, and then proceed to Part IV.  Then print, sign, and date the form and mail it to the address found in the form instructions.  

Another thing to note about reporting gifts from foreign persons is there is no "gift splitting" and in your case, your wife's parents would be "related parties", so the aggregate amount you The form is due when your individual income tax is due.  If you file an extension for your individual income tax return, one is also automatically granted for your Form 3520 and you are not required to file separately for an extension.