Must I report a gift of foreign money if I don’t bring it into the US?

August 15, 2011

From:  Georgeo
Date:  Mon, 11 Apr 2011
Subject:  Foreign Gift

Dear Michael Gray,

My father lives outside the United States. He made a gift to me of $50,000 cash. The money is deposited in a foreign bank account. I don’t intend to transfer this money to the United States. I am a US citizen. My father is a foreign citizen.

Do I have to let the IRS know about this money? Is the gift taxable?

I would appreciate if you help me with the above matter.

Thank you

Georgeo

Answer

Date:  Mon, 16 May 2011

Hello Georgeo,

Yes, you do need to let the IRS know about the foreign bank account. It is reported on Form TD F 90-22.1. You can get the form at the IRS web site, www.irs.gov. The form is informational, and no payment is due with the form. The 2010 form is due on June 30, 2011.

The interest for the bank account must be reported on your individual income tax return. US citizens are taxable on their worldwide income. If foreign tax is withheld on the interest, you may be eligible to claim a foreign tax credit. There is a box at the bottom of Schedule B where you must state that you have a foreign bank account with a balance of $10,000 or more.

A gift is not reported as taxable income. Foreign gifts of $100,000 or more must be reported on Form 3520. Form 3520 is due on the date your individual income tax return is due, including extensions.

Good luck!


Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.


Home    Newsletter Archive    Introducing Michael Gray, CPA    Articles    Tax FAQ   Need Help?    Other Links


Michael Gray, CPA
2190 Stokes St. Ste. 102
San Jose, CA 95128
(408) 918-3162
FAX: (408) 998-2766
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+
Our Blog

Sign up for our free monthly newsletter,
Tax & Business Insight,
for the latest tax news!

subscribe html
unsubscribe text only

We respect your email privacy!