gift tax when spouse is on H1b/H4 visa but satisfies substantial presence criteria

[kuldeep_23123]

As an H1B visa holder (satisfying substantial presence criteria) what's the max amount i can transfer to my wife's bank account (she is on H4 and satisfies substantial presence criteria) to avoid gift tax?

[DaveF1006]

According to Turbo Tax, you may gift your wife up to $16,000 to avoid the gift tax.

[kuldeep_23123]

So transferring to spouse has the same max amount limit as transferring to anybody else in this case? That's interesting, can i get a second opinion on this please from some other experts to make sure that is the case. Based on my limited research on internet it does seem like there should be a higher limit for spouse. I am not able to interpret the law correctly, which clearly specifies limits for a transfer from citizen spouse to citizen/ non-citizen spouse but not for a non-citizen to non-citizen spouse, when both are tax residents for the whole year.

Also thank you for your response.

[MarilynG1]

For gifts made to spouses who are not U.S. citizens, the annual exclusion has increased to $164,000. See Nonresidents Not Citizens of the United States. 

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.

@kuldeep_23123

[kuldeep_23123]

Based on that link you posted "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",

So it seems like if you are a US citizen or if you resided in US, you can't be a 'nonresident not a citizen of the United States'.  And in our case since both of us resided in US for the whole year (and since we satisfy substantial presence criteria) , doesn't look like we will fall under Nonresidents Not Citizens of the United States  category. So it does seem like the max limit should be at least $164,000 as you have suggested if not more like the one for citizens. Please let me know if there is any flaw in my understanding. 

Also thank you again for going through my question and taking time to clarify it. I wish the law was written in a more understandable way.

[Vanessa A · Accepted solution]

If you both meet the substantial presence test, and both file as US Residents, then you are correct.  There would not be a limit for the amount you can transfer between spouses if you lived in the US at the time of the transfer and also were considered a US Resident.

If you did not meet all of the criteria, then the limit would be $164,000 for a tax free transfer between spouses. But you are good either way for up to $164,000 so there is no flaw in your understanding. 

[kuldeep_23123]

Awesome, thank you for the clarification.