Should I report the international gift from my parents?

[Beryl Guo]

I’m an international student from China with F1 status. I’ve been here for 7 years.  My parents wire transferred me a total of over $100000 last year from their accounts in China to my three bank accounts at boa. Should I report this gift from my parents through form 3520? I know should be a resident alien now since it’s been over 5 years, but I’ve heard of a treaty from China that says students can still be nonresident alien after 5 years. Is that true? Is the form 3520 for resident alien?

[AmyC]

1.The form 3520 is for resident aliens. If you are a nonresident alien due to the treaty, you would not file it.

2. There is a provision in the U.S.-China tax treaty that allows certain students to remain nonresident aliens for tax purposes beyond the five-year period. This means you may still qualify as a nonresident alien, if you meet specific criteria outlined in the treaty.

3. The gifts are not taxable income but if resident alien status, then you must report.

References:

• Foreign persons
• US treaty with China

[Beryl Guo]

What are the specific criteria to be qualified as a nonresident alien beyond five years? I didn’t find that in the treaty document. If I’m a nonresident alien, I don’t need to do any report?

[AmyC]

1. You must meet Article 20 - Students: This article of the treaty specifically addresses students and trainees. It allows students from one country who are temporarily present in the other country solely for the purpose of studying to be exempt from certain taxes.  

Specific criteria:

•  They are present in the U.S. primarily for educational purposes. 
• They are not engaged in any substantial employment (beyond limited on-campus work). 
• They maintain a closer connection to China.

The treaty may allow for an extension of this status if the student continues to meet the criteria outlined in Article 20.

2. Nonresident alien is not required to report Form 3520.

[Beryl Guo]

How can I prove that I’m maintaining a closer connection to China? Does it depend on have many times I go back to China per year?

[RobertB4444]

It depends on how much the gift is for.  As a ballpark anything in excess of $100,000 for the year (in total gifts) requires reporting on form 3520.

Here is the IRS info on foreign gifts and what needs to be reported.

@Beryl Guo