Gifts from Foreigners: Are they Taxable?

One of the most misunderstood tax issues is whether you will be taxed for inheritance or gifts received from non-resident alien relatives. The simple answer is gifts and bequests are not taxable, since the gift giver is not subject to US taxation. However, there are IRS rules that may apply to such inheritances or gifts you need to be aware of and abide by.
The IRS defines a foreign person as “a nonresident alien individual or foreign corporation, partnership or estate.” Foreign nationals who are green card holders are usually considered “domiciled” in the United States for gift giving and estate tax purposes. Likewise, foreign nationals living in the US who do not possess a green card may be considered domiciled in the US for the purpose of tax rules. Therefore, in these cases, IRS tax laws do apply.
Reporting Responsibilities
If the value of the aggregate of foreign gifts received by a US taxpayer exceeds $100,000 from non-resident aliens or a foreign estate, the gifts must be reported to the IRS even though they are not taxed. Also, gifts received of greater than $15,797 in 2017, or $16,111 in 2018 from foreign corporations or partnerships must be reported. Such individuals must file IRS Form 3520 separately from their income tax return. The date due for filing is the same as for submitting your income tax return, including extensions. Failure to file subjects the offending US citizen to penalties.
Those who receive gifts from expatriates may be subject to tax under the new Internal Revenue Code Section 877A. If you have questions about gifts from expatriates, or anything else regarding gifts and taxes, please feel free to contact us.
Professional Tax & Financial Services is located at 25124 Springfield Ct., Ste. 260, in Valencia. For more information on taxes or how to receive unlimited tax planning advice, please call 661-259-1967 or 1-800-998-4829. You may also visit us at www.scvprotaxservices.com.