Gift Tax

[chewbacca]

Here's the situation:

My parents are Canadian citizens living in Canada. No US ties.

Myself, their son, is a Canadian citizen and US permanent resident with no residential ties to Canada.

My parents want to give me some money, say C$50,000.

Will there be any gift tax due to Canada?, the US?

Are there any forms that need to be filed to record the event?

Is there anything that should be done, other than take the money? :)

Thanks

[nelsona]

No problems. It would be a good idea tohave them write you a note, just in case the IRS would audit you.

[nelsona]

You might also want to look at Form 3520 to see if it should be reported there.

[nelsona]

it would seem the threshold for reporting gifts from one foreign person in one year is $100,000.

[chewbacca]

Thanks so much for your assistance.

I read the instructions for form 3520 as you suggested and also saw the $100,000 threshold figure.

So other than getting a note from my parents it appears that there is nothing else to do regarding gift tax or reporting the event.

[cimit]

I just wanted to reiterate how great this site is. I am running into this same situation (although not the same $ amount unfortuneately :oops: )and so this is very helpful.

Great forum!

[nelsona]

Great to see you are reading the archived posts arther than just asking a repeat question.

[chewbacca]

I'm glad someone else posted on this thread, as it made me remember a question I wanted to ask.

nelsona, I called the IRS in an attempt to confirm everything we talked about in this thread. I guess that was my first mistake. :)

Anyway, the IRS rep told me that I should file form 3520. I mentioned the $100,000 foreign gift threshold. The rep still seemed to believe that I needed to file form 3520.

I think the rep is incorrect. What do you think?

[nelsona]

I KNOW the telephlunkie is incorrect.

I'll bet you mentionned form 3520. If you hadn't he would have been lost.

[flumox]

This will sound like a dumb question; but I never take anything for granted when it comes to tax rules. so just to be sure: the $100,000 threshold for reporting gifts from a foreign person to a US person is measured in US dollars, right? (Eg. a gift of just over 100k Canadian at a time when the Canadian dollar is far enough below par would be under 100k US; in such a case, I assume the US dollar value of the gift would be what the IRS counts -- is that right? If not, and the amount was sent from Canada in US dollars (below 100k US), would that mean the amount could be considered to fall under the threshold?)
Sorry if this is totally obvious but I've been caught off guard before by unexpected rules/interpretations.

[nelsona]

The IRS is ALWAYS interested ONLY in US dollars.

[nelsona]

Would you ask the same question if the currency in canada was pounds, or Lira, or piasters.

The fact that canada's currency has a name that sounds like the US name for their currency is simply coincidence.

[flumox]

When a US nonresident alien (a Canadian resident) gifts money to a US resident, and wants to legally avoid gift tax, does it make a difference HOW the money is transferred from Canada to the US person? I was told it can be done by writing a cheque from the giver’s Canadian bank account which is then deposited to the recipient’s bank in US, OR by electronic transfer into the US account. Either way it would not incur US gift tax. Is that correct?

Thanks for such a helpful forum.

[nelsona]

there is NO GIFT TAX under any circumstance when a non-resident gives money to anyone.

Did you not read this thread?

the $100,000 figure is merely the threshold for REPORTING the gift.

[flumox]

Yes, I read the whole thread. And many others. Thanks for all the info. But I've heard, for ex, that if a non-res gives money to a resident and the transaction occurs "in" the US, that's taxable. So I was wondering what counts as a transaction "in" the US.

Thanks for the reply.