Gift Tax

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okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Gift Tax

Post by okinawafl »

hi nelsona,

I arrived U.S. mid-Sept this year with TN visa. Expected work in U.S. several years. I am not married, and don't have significant ties with Canada. As you mentioned before that I should file as NR of Canada (departure mid-Sept), and file 1040 as U.S. resident (full year) if I understand correctly.

I just notice a problem. Back to March this year when I still in Canada, I transfer over 20k from my Canadian bank account to my mom account to repay the tuitions and expenses she has paid for me in the past years. And this month, I transfer another 12k to her. If I have to file as U.S. resident in 2021, do I have to pay gift tax? and what is the tax rate for gift tax? Would IRS asked me for any documents to proof this?

Thanks so much.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gift Tax

Post by nelsona »

First, you file as an EMIGRANT form canada, not non-resident; nr happens only in year(s) following emigration.

Wnem it comes to filing in US, the advice here is ALWAYS, to ex[plore the two or three options, to see which yields lowest tax.

In your case you have the option of filing 1040NR or 104NR1040 (dual status) or 1040 full year.

If you have gifted too much to your mother to avoid gift tax, then it may simply be better to file 1040NR for this year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Gift Tax

Post by okinawafl »

Hi nelsona

the money is in fact repayment to mom as she paid all my tuitions in the past years and she paid off my OSAP this year (almost another 30k) Would IRS accept this reason?
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Gift Tax

Post by okinawafl »

Sorry I mean would CRA still treat this as Gift? or it can be treated as repayment (not gift)?
thanks again
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Gift Tax

Post by okinawafl »

Sorry I mean would "IRS" still treat this as replayment (instead of gift) if I also need to repay my mom next year when I am a tax resident (passed SPT in 2022) ?

thanks again
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gift Tax

Post by nelsona »

If it is a repayment it is not a gift. There would need to be documentation between you and your mother.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Gift Tax

Post by okinawafl »

Thanks nelsona
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Gift Tax

Post by okinawafl »

"If it is a repayment it is not a gift. There would need to be documentation between you and your mother."

Hi nelsona,
as for documentation, would an excel spread sheet showing breakdown (date and amount) of tuitions and living expense my mom paid for me in the past few years and the OSAP loan payment she paid for me be sufficient?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gift Tax

Post by nelsona »

sure.
signed by both of you.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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