Gifts

[RR53]

We live in the US. We are about to receive a lumpsum from my mother and mother-in-law living in India, they are not resident aliens green card holders or US citizens. Do I need to pay tax when I receive the money from them? Should I declare that money as a gift while paying taxes? If yes, what are that I need to fill out?Are there any limit on dollar amount/year in gifts?

[DoninGA]

Gifts received are not reported on a tax return regardless of the amount received.

However, since this gift is from a foreign individual you may have to report the gift received on an informational form to the IRS.  If the amount received as a gift is over $100,000 then you would need to file a form 3520.  The form is mailed separately from your federal tax return but must still be filed by the due date of the federal tax return.

TurboTax does not support IRS Form 3520.

Go to this IRS website for the Form 3520.  Complete and mail the form to the IRS using the instructions provided - https://www.irs.gov/forms-pubs/about-form-3520

[JandKit]

Hi RR 53.

In most cases, Assets that you receive as a gift or inheritance are not taxed at the federal level. If, however, the money is placed in an account and produces income, you will be taxed on that income. In the US, Each individual can receive gifts from outside of the US up to $100,000 with no requirement. If the income exceeds $100,000, the amounts must be reported on Form 3520 to the IRS

[KanchanM]

Hello,

As per the Tax Law in United States, when you receive gift, the receiver of the gift does not pay the gift tax, however the payer of the gift pays the gift tax, so in your case as your mothers are not the US citizens nor the residents, neither of you will have to pay gift tax. However, there are certain filinf requirements and you may have to fill out Form 3250. More information to see the requirement and how to file Form 3250 can be found in https://www.irs.gov/businesses/gifts-from-foreign-person#:~:text=For%20purported%20gifts%20from%20fo...). 

If you keep the money you receive as gift in the foreign country you may also have to file FBAR Form 114 and Form 8938 - FATCA.

[Will F2]

I sold property from our inheritance. I will split this 3 ways. under 100K. Will this be income to me? 

Can I gift to my brother and sister?

[MirthaG]

Generally persons receiving gifts or inheritances are not taxable on the gift or inheritance. The donor or estate  would be the one subject to estate or gift taxes.  In this instance foreign persons or estates not domiciled or residing in the US are not subject on taxes for estates or gifts made while located in the foreign country. That being said, the US persons receiving  foreign gifts or inheritances are subject to US reporting requirements.  The US persons are required to report on form 3520 gifts  or inheritaces  of more than $100,000 a year. There are high penalties for failure to report.