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The line between Gift and Income

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fni

Guest
What is the name of your state? GA

How to distinguish a gift tax from income tax ?

For instance, if my mother-in-law sends me $50k from her bank account in China to mine in the US, is it considered my income ? Do I have to pay tax on it ?

In China perople can't send US dollars abroad officially, but since my mother-in-law is in export business, she can ask her company to send money to me while she pays the company. And this gets things complicated, it might seem a Chinese company is paying me, but actually it's not, because she has to pay Chinese currency to her company by the exchange rate.
 


abezon

Senior Member
The money is a gift. You do not report it as income. Since you're receiving less than $125,000 in a year, you do not have to report the foreign gift either.

As long as you don't perform any services for her company, it shouldn't be too hard to show that she was just using her employer to circumvent China's laws.
 
F

fni

Guest
Thank you for the reply. The $50K figure is just a random number, if she indeed sends me more than $125K, how much tax and how would I have to pay it ?

If I go home to China and exchange Chinese currency to USD via a "friend" and then carry them with me to enter the US, do I have to report to US customs and IRS, how would I pay tax, if any , on them ? Thanks.
 

abezon

Senior Member
You don't pay any tax, usually. You just report the gift. Search recent posts for foreign gifts to see discussion on what form to file, etc.

Do not bring cash into the US unless you want to be grilled by customs & the FBI for a few hours about how long you've been laundering money for the drug cartels. ;) Wire transfers are easier, safer, & look more legitimate.


Here's that link: https://forum.freeadvice.com/showthread.php?s=&threadid=144972
 
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