What is the tax on foreigner’s gifts to United States citizens?

September 26, 2008

From:  Tomasa
Date:  01 Aug 2008

Can an individual from another country make a gift to a US citizen without incurring a U.S. gift tax? What is the limit per year?

Answer

Date:  06 Sep 2008

Hello Tomasa,

This is becoming a more complicated issue. Non-residents of the U.S. aren’t generally subject to U.S. gift tax, except for transfers of tangible property located in the United States. However, effective June 17, 2008, gifts by former residents or citizens of the U.S. to U.S. citizens or residents can now be subject to a transfer tax of 45%. The annual exclusion amount of $12,000 isn’t subject to the tax.

Gifts of more than $100,000 received from a nonresident alien must also be reported on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.

The country of residence for the non-resident alien who make the gifts could also impose a gift tax for gifts to U.S. persons.

Good luck!
Mike Gray

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