Cash Gift from Parents Overseas

[gurnawaz_buttar1]

Hello,

My parents who are citizens of India as well as residents of India would like to send my wife and I a money transfer of around $50k as a gift to help us buy a home. My wife is a US citizen and I am a permanent resident of the US while still maintaining my citizenship in India. 

The money transfer will come straight out of my parents 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 my parents have already paid taxes on the money in India, would we as receivers have to pay taxes on the gift money here as well? Do my parents will have any reporting requirements towards 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. 

Thank you in advance for your assistance.

[capankaj-galhotr · Accepted solution]

I am not convinced with the answer given by Turbo Tax Employee. The US tax rules (in best of my knowledge) says that If a foreign citizen/residents want to send a gift (cash etc) to a US Citizen/legal resident and amounts will be less than $100000 then there is no US tax requirement but in case amount exceed $100000 then US Citizen/legal resident have to report in Form No. "3520" to IRS. But I advise always file form 3520 (whatever the amount) to support of your bank account trail for future reference. There will be no tax at all in the above situation.

[Opus 17]

The TT employee missed the foreign part, but this is also a two-year old question.  The TT answer is at least half-right; the recipient of a gift does not have to pay tax period.  The giver might owe gift tax, but in this case that would be a matter for the parents to deal with in their home country.

Separately, any US person (citizen, resident alien, etc.) who receives a gift from a non-US person must use form 3520 to report the gift, if the total of all gifts received is more than $100,000, or if the gift is more than $15,000 and is from a foreign corporation rather than a person.  There is no specific tax owed, but the IRS wants to keep track of the movement of large amounts of money and also make sure that it is not wages disguised as a gift.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/Businesses/Gifts-from-Foreign-Person">https://www.irs.gov/Businesses/Gifts-from-...>

[JoshuaD]

Hello Gurnawaz_buttar1,

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement. If the individuals have already paid the tax on this amount, you are not required to pay tax on this gift income.

While there is no actual limit to the amount of gifts you can receive every year, there is an annual exclusion, and any amount under that amount, does not have to have taxes paid on the gift. The amount for 2013 was $13,000; keep in mind that this amount changes on a yearly basis.

Thank you for using TurboTax, and have a wonderful day!

[Carl]

Joshua - just to make sure I've not been giving out incorrect amounts, are you sure the exclusion is 13K? Seems like I read in the latest IRS pub on that back in Dec, that for 2014 it was 14K. I can't recall the pub - can you please?

[pk007]

Hi Joshua, Does the limit of 100,000 per form 3520 (chapter IV)doesn't apply in this case of foreign gift, since it is coming from India? Can you please clarify further?