Do my parents have to deal with taxes if they gift me $500,000?

[SpaghettiEd]

My parents are not US citizens, and do not live in USA. However I'm an US citizen and do live in the states.

They plan to sell some land and gift me some of the proceeds (around $500,000), could they just wire me the sum? Any tax complications for my parents (probably not from US but their own country) or me?

Thanks,

[MayaD]

You will need to file form 3520. 

U.S. persons (and executors of estates of U.S. decedents) file Form 3520 to report:

• Certain transactions with foreign trusts.
• Ownership of foreign trusts under the rules of sections Internal Revenue Code 671 through 679.
• Receipt of certain large gifts or bequests from certain foreign persons.

Instructions for Form 3520 (2022)

Your Parents need to file Gift Tax.

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, 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 $16,000.
• Your outright gifts to your spouse who is not a U.S. citizen total more than $164,000.

Instructions for Form 709 (2022)
 Edited [04/07/2023, 1:14PM, PST]

@SpaghettiEd

[SpaghettiEd]

Would I have to pay taxes for the sum received?

Thanks,

[MayaD]

The tax is owed by the giver of the gift, not the recipient. 

For more information check: The Gift Tax

[Opus 17]

Someone who is a non-resident and a non-citizen only owes US gift tax if the gift is tangible property located in the US.  This could include land, collectibles, or other property.  If your parents are selling land in the US and giving you the cash, they may owe capital gains tax on the sale of the land, but they do not owe gift tax, because they are giving you cash and not tangible property.  If your parents are selling land outside the US and giving you the cash, they owe no US tax at all.  Basically, the US has no jurisdiction to impose tax on a person unless they are citizens of the US, residents of the US, or own property in the US.  

They might owe gift tax in their home country.

If you are a US citizen or resident (which makes you subject to US tax law), you don't owe gift tax because under US law, the recipient does not owe gift tax.

You will need to file form 3520, which is a report of large gifts from foreign persons, but this is only a report and no tax is owed.  The deadline to file form 3520 for a gift given in 2023 would be April 15, 2024, same as a regular tax return, but the form is not part of a regular tax return (it is filed separately) and Turbotax does not prepare this form for you.

[SpaghettiEd]

But my parents are nonresidents and not citizens of the United States, they don't files taxes here. They still would have to pay gift tax?

[SpaghettiEd]

Thank you very much, this explained it all.

[fanfare]

your parents are not subject to US Tax Law.

a gift is not taxable and not reported on your tax return

If your parents gift you no more than $100,000 per year you would not have to file that form 3520.

@SpaghettiEd