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Gift Tax Inquirie

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glerp

Junior Member
What is the name of your state (only U.S. law)? Pennsylvania

Hi there. So I've got a friend of mine who resides in Japan sending me money so that I can afford my apartment. I know that recipients of gifts aren't subject to tax (at least that's what I've read) and the only tax issues would be on his end if he sent more than 14,000 in a year. As well as the fact that he only ever needs to actually pay any tax is if he exceeds the 5.43 million threshold. Though I believe I need to fill out a form 3520 because i'm recieving a gift from a foreign individual. Would I be subject to tax then? What all does my friend need to do? Is all this info i've written correct? Basically, can any confirm my suspicions about gift tax and give me a little insight into what all will need to done concerning taxes? Thank you for your help.
 


FlyingRon

Senior Member
If it's an INDIVIDUAL sending you the money and they are sending you less than $100,000 in a the year, you don't have to file a 3520. It's laid out right in the instructions http://www.irs.gov/pub/irs-pdf/i3520.pdf under Who Must File? Item 4(a).

If your friend is not a US citizen then there's no gift tax issues (as far as the US is concerned, I have no clue about Japan) no matter how much he gives to US citizens.

There's no tax due from you.
 

glerp

Junior Member
Oh I see. Apologies. Thank you for very much though for the help. One other thing though, I still need to report the gift money that I receive though do I not? Since the IRS will be wondering where that money has come from?
 

LdiJ

Senior Member
Oh I see. Apologies. Thank you for very much though for the help. One other thing though, I still need to report the gift money that I receive though do I not? Since the IRS will be wondering where that money has come from?
NO. People who receive gifts do not report anything unless its a foreign gift in excess of 100,000. Its the giver of gifts who has to report the gift. However, since your friend is not a US citizen your friend is not subject to the US laws on gifts.
 

glerp

Junior Member
I've had to report things previously despite not actually owing any tax, so that's why I asked. Thank you for clearing things up though.
 

davew128

Senior Member
However, since your friend is not a US citizen your friend is not subject to the US laws on gifts.
Not true. If the gift is of US situs property they certainly are, and before you say the gift isn't of US property, I would say don't be so sure. The case law in this area is pretty expansive when it comes to defining what it and isn't US situs property for transfer taxes. About the safest way to do this is to electronically transfer funds from OUTSIDE the US or write a check on a non US bank.
 

glerp

Junior Member
Not true. If the gift is of US situs property they certainly are, and before you say the gift isn't of US property, I would say don't be so sure. The case law in this area is pretty expansive when it comes to defining what it and isn't US situs property for transfer taxes. About the safest way to do this is to electronically transfer funds from OUTSIDE the US or write a check on a non US bank.
Well, currently he sends me the money via paypal and I withdraw it into my US bank account.
 

LdiJ

Senior Member
Not true. If the gift is of US situs property they certainly are, and before you say the gift isn't of US property, I would say don't be so sure. The case law in this area is pretty expansive when it comes to defining what it and isn't US situs property for transfer taxes. About the safest way to do this is to electronically transfer funds from OUTSIDE the US or write a check on a non US bank.
Dave...

Where did you get the idea that the funds involved are US situs property?

In any case...I will rephrase. A person who is not a US citizen or permanent resident, who is providing a gift from abroad, CANNOT be held to US gift tax laws.
 

davew128

Senior Member
Dave...

Where did you get the idea that the funds involved are US situs property?
Because often times said foreign persons have US bank accounts...and a paper check written on that US bank has been considered to be US situs property causing a gift tax for the NRA.
 

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