IRS/CRA gift reporting and tax

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jixca
Posts: 75
Joined: Wed Apr 06, 2016 9:12 am

IRS/CRA gift reporting and tax

Post by jixca » Mon Jun 15, 2020 12:19 am

Single Canadian living in US under TN. US resident for IRS and non-resident for CRA, likely remaining that way for another couple of years.

Family (parent, sister) are residing in ON, Canada and planning to move house, they have no US status. I want to contribute and put in say USD $100k to help them budget for bigger house. The new house will NOT be under my name. I can transfer the money from my US bank savings account to my Canadian bank account then to family members.

Question, what should I plan for in terms of reporting or tax impact for IRS or CRA? As far as I know CRA has no gift tax so myself and family in Canada shouldn't have any issue.

nelsona
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Re: IRS/CRA gift reporting and tax

Post by nelsona » Mon Jun 15, 2020 6:28 am

This is agift in IRS terms, and is subject to gift tax, since it exceeds the annual limit you can give, to non-spouse. Read up on gift tax on IRS website.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 16414
Joined: Wed Oct 27, 2004 2:33 pm
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Re: IRS/CRA gift reporting and tax

Post by nelsona » Mon Jun 15, 2020 6:33 am

Once you go over the individual gift limit, you then use your lifetime exemption, which is in the $11M range, so there will be no tax, just reporting. See IRS Form 709.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jixca
Posts: 75
Joined: Wed Apr 06, 2016 9:12 am

Re: IRS/CRA gift reporting and tax

Post by jixca » Mon Jun 15, 2020 10:42 am

Thanks. Yeah that's what I figured too, the IRS annual exclusion is only 15000 but the lifetime limit is so high it's just another form to report. Looks like I can count the exclusion per person given and possibly spread it over 5 years if I want to avoid going into the lifetime bucket (but still requires reporting)

Question, since they're moving primary residence and will use the sale value to buy the new house, if the amount I contribute is excessive and they return it say 50k, I'm assuming I need to report that again (form 3520)? Or can I just submit the net transfer value in form 709?

nelsona
Posts: 16414
Joined: Wed Oct 27, 2004 2:33 pm
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Re: IRS/CRA gift reporting and tax

Post by nelsona » Mon Jun 15, 2020 2:38 pm

how about you decide what they need when they buy the house. No need to complicate matters.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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