Gift Tax - Gift from Wife's Non resident parents

[JPL]

What is the name of your state? Virginia

My wife's parents are going to give us money towards a downpayment on a home. My wife is here on a student VISA, she is not a US citizen and her parents are ont US citizen's nor do they live in the US. If they gift us more than 24k are they subject to US Gift taxes?

Thanks

[LdiJ]

Originally Posted by JPL

What is the name of your state? Virginia

My wife's parents are going to give us money towards a downpayment on a home. My wife is here on a student VISA, she is not a US citizen and her parents are ont US citizen's nor do they live in the US. If they gift us more than 24k are they subject to US Gift taxes?

Thanks

No, they would not be subject to US gift taxes. However, if the gift is more than 105,000, you will have to report the gift because its coming from outside the country.

[JPL]

Thanks for the quick reply. I don't mean to be rude but would like to understand why they are not subjuect to the tax. Can you explain why? Is it because they do not have any other US taxable income therefore they can give us any amount with the understanding that over 105k I would have to report it.

thanks again

[abezon]

Because they're not US citizens or residents. The 'gift tax' is basically a way to use up some of your estate tax credit while you're alive. The gift tax return is a way of tracking how much of the credit a person used before s/he died. The donor has to file it; the recipient does nothing. BUT, the US can only impose estate taxes when US citizens or residents die. Since the US does not have the power to tax your in-laws when they die, it can't make them file a gift tax return either.

However, since large transfers into the US could be a form of money laundering, the Treasury Dept requires the recipient to report a foreign gift if it exceeds $105,000 in a year. The recipient (your wife) is in the US, so the US gov't has the power to make her report a gift. She doesn't pay any tax; she just files a Form 3115 (pages 1 & 6).

[JPL]

Thanks again, greatly appreciated.