Gift from elderly Canadian Mom to US resident daughter

[andcormon]

Good day

I live in the USA and am a US resident and Canadian citizen. My Canadian elderly mom is distributing her bank accounts to her children. I received a substantial gift, under $100K. I still have Canadian bank accounts. Can I deposit the account in Canada and leave it there? How do I avoid high US taxes?

I have a self-directed Canadian RRSP that has dropped below the threshold and is incurring high annual fees. Could I deposit $10,000 of my gift to that RRSP to avoid the fees?

Thanks for any advice.

[nelsona]

US doesn't tax gifts in the hands of the receiver, regardless of the source. If the donor is foreign, and the gift is over $100K, the US taxpayer merely has to REPORT the gift on form 3520.

So, your concern of 'avoiding high US taxes' is unfounded.

You can do what you want with the money. leaving it in Canada or elsewhere doesn't change the fact that you will be taxed on INCOME generated by that money. Leaving it outside US does subject you to more foreign reporting on your assets.

As to putting some in your RRSP, that will depend on your broker. Most will not accept new monies from US residents. Your RRSP broker knows you are in the US, right?

[andcormon]

Yes, my RRSP account is with a self-directed Canadian bank and they know that I'm a US resident. I will check with them. Thank you.

[andcormon]

Sorry, one more question. Since the exchange rate from Cdn$ to US$ is paltry, I plan to leave the money in a Canadian bank account that I've kept since leaving Canada.

Do I have to report the money on 90.22.1 form?

Thank you.

[nelsona]

That form no longer exists, as you should know. We now report our foreign ACCOUNTS in a FinCEN online form.

Thus, if you include it in one or more of your existing ACCOUNTS, your FinCEN will be the same as last year's, except for the value(s) of the accounts.

This sum may also mean you need to report FATCA information as well. See IRS Form 8938.

Just an opinion on "leaving" the money in Canada (presumably in a bank account). The 'good" exchange rate that the C$ had a few years ago was an anomaly in my opinion, and do not expect it to get better any time soon. Historically, it just about right looking over the last 40 years.
By letting it sit in Canada, you may be missing out better uses for it (despite the "lower" value -- it isn't really, just because the currency uses the same name) in the US such as tax-free or tax-advantaged investments like your home, Roth, IRA, etc. You wouldn't leave $75K sitting in a US bank, why leave C$100K sitting in a Cdn bank? Just a thought.

[andcormon]

Yes, I forgot, it's the FinCen form. The amount I received is $45,000 Cdn. You raised good points. Our family needs a car, so even with the exchange, it would be a helpful amount.

Thanks for all your help for the past decade since I moved from Cda. :)