IRS/CRA gift reporting and tax

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jixca
Posts: 86
Joined: Wed Apr 06, 2016 9:12 am

IRS/CRA gift reporting and tax

Post by jixca »

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 »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
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Re: IRS/CRA gift reporting and tax

Post by nelsona »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jixca
Posts: 86
Joined: Wed Apr 06, 2016 9:12 am

Re: IRS/CRA gift reporting and tax

Post by jixca »

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

Post by nelsona »

how about you decide what they need when they buy the house. No need to complicate matters.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jixca
Posts: 86
Joined: Wed Apr 06, 2016 9:12 am

Re: IRS/CRA gift reporting and tax

Post by jixca »

I'm going to remain US tax resident and still non resident of Canada.

Family (parent) is buying a house, I'm helping with money and will transfer over 200k to make the final payment. It's more of a free loan and I'll take back 170k before year end but keep in Canada under my own account because interest rate is higher. The 30k I plan to just leave it in the house price (or as gift) for 2020.

Question, would I need to report to IRS anything if the total of 15k per person per year is not exceeded in 2020? Do I need to also have some document on the transfer so it doesn't look like a gift?
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