Bringing money to the US
 

I am new to this website - but am excited I found it! I've been living in the US for just about 15 years now and it's taken this long to discover you - what was I thinking!!!

I'm sure there have been postings on this before, but I couldn't find anything specific. My brother passed away last year and left his house to my Mum and I. She has just sold the house and wants to send me £50,000 - I am going to use this as a downpayment to buy my own (if I can find something in SF that is even vaguely affordable!).

Can anyone recommend a way to bring this large amount of money into the US?

Sandra

Re: Bringing money to the US
 

Sandra: I'm sure that some kind people on this forum will offer to hold it for you until you get here.

HOWEVER, their kind offers notwithstanding, what you probably should do is use either xe.com, or even your own bank, to wire the money to yourself. I'm not sure if the new national security measures will raise a flag at a large amount like that being transferred, but I'm sure someone will come along with that information soon.

You probably already know this, but on such a large sum even small differences in the exchange rate makes a HUGE difference in how much you get in dollars. Exchanging at $1.82, for example will give you $91,000, but exchanging at $1.78 will give you $89,000 - a full $2,000 less.

The good news is that exchange rates are in your favor, and will probably continue to be so for the forseeable future (8 months ago, for example, you'd have only got maybe $80,000). But make sure that whoever transfers/exchanges the money gives you the wholesale rate (close to the "mid-rate"), not the commercial rate or tourist rate. There are other threads on this topic (search for "exchange" maybe), but I'm off and don't have time to check this for you.

XE.com has had some good reviews here, but I couldn't bring myself to use them - too scared at the prospect of using an internet company I've never done business before. I just used my local bank, wired to Smile in the U.K., cost me $6 for the wire and the rate I got was only 1 or 2 cents above the mid-rate XE.com was quoting at the time.

Good luck - and congratulations (kind of!) on the windfall. Losing a brother must be so diffcult, but I'm sure that when you have your lovely house overlooking the bay, you'll sit on the porch and think of him and thank him for getting you into a new home.

Do you have a bank account ( off shore) back home? If so, you can bring up to $10,000 per person, each year without causing any red flags to go up. Above that, the IRS may take a closer look.

Bear in mind too that transferring a large sum all at once is going to raise a flag or two. Specifically, under the Patriot Act- banks have to report any transaction above $3000 to the government. I'm not sure who exactly they report to, just that they have to report. If you bring the money over all at once and don't declare it on your tax return you'll be at high risk for an audit.

Re: Bringing money to the US
 

If you are a USC or greencard holder then you may have to pay some tax on whether you bring it to the US or not. To leave it overseas just to evade any possible tax is fraud, and will make a big mess for you - so please do not be tempted to do that. Having said that, I don't think that such a relatively small sum is taxable, but you should consult a tax professional for specific advice.

So far as bringing money to the US goes, there is absolutely no problem with bringing in as much money as you like if you have a legitimate explanation. There are huge number of such transactions every day, and most are legit. There are a good number of people on this very board, myself included, who brought in the proceeds of the sale of a house in the UK, and have had not had federal investigators crawling all over our files. In any case money coming out of the UK is considered relatively "clean" as the UK cooperates fully in the international anti money laundering efforts.

So far as moving the money from the UK goes, I would not recommend one of the internet businesses for such a large sum, that is large to you, I presume. I am sure they are fine for a few thousand pounds/ dollars, but I would not trust them with larger amounts. So, use a regular high street bank in the UK, and ask for the "wholesale" or "market" rate and you'll get probably 2-3¢ more for each £ than the "tourist" rate.

Any High Street bank in the UK will give you a very similar rate at any moment in time (the wholesale rate varies by the second, and the bank branch has to phone their currency dealers to get the current price for which ever currency you are wanting to buy.

If the clerk you are speaking to doesn't understand "wholesale" or "market" rate ask for the manager or supervisor as you should remember that substantial foreign currency exchange transactions are still relatively unusual in the branch banking world.

And just for the record, the Patriot Act does not require funds to be reported, it is an earlier anti-money laundering initiative that goes back at least as far as the 1980's that requires transactions in excess of $10,000 in cash to be reported, to FinCEN. There is however also "suspicious activity reporting", which goes to the FBI, and there is no formal limit for that, but I believe that there is customarily a $5,000 threshold before they show much interest. And finally, if a bank thinks that you are making multiple transactions to avoid the reporting of a larger overall transaction then you will be reported for "structuring", and then you are much more likely to attract the attention of investigators who will assume that you do have something (criminal) to hide!

Re: Bringing money to the US
 

Pulaski had to watch out for that because he was bringing loads od money.... several suitcases full was what I heard! ;)

Thanks for the great advice - I was leaning towards bringing it in in smaller chunks, but now don't want to do that!

I guess I'm more worried about the tax implications than anything else - I know it's clean money! Does anyone know what the tax implications are?

Thanks all,

S

Tax Issues
 

I imagine the tax issues are to do with income reported to the IRS. Whilst the proceeds from a house sale transferred to the US should not be taxable, a gift (even from a dearly departed) would need to be declared and tax paid, just as if you had been bequeathed it from a relative/friend here. I am not a CPA and you would be advised to see one and resolve this.

- Tim

Re: Bringing money to the US
 

Steamer trunks, actually! :p

Well the Estate in the UK would have had to clear probate and pay any Inheritance Tax to UK Gov if applicable.

I do not know the US tax position but in UK it is the giver that could have a tax issue, PET) not the receiver. But not in this case.

Moving money is a competitive market like any other, here is another link. Even if you do not use them they have some good information.

http://www.hifx.co.uk/index.asp

Might be easiest if you have no UK account just to get the Executor to transfer the money to your US account. Your bank will give you the instructions that are needed.

There is the Double Taxation Treaty us/uk, does this apply anyway and if not how would they know how you got it?

That's as maybe, but I'd recommend going for quality. I.e. a known bank, with a reputation to protect, not some unknown quantity such as an up-start internet business.
That assumes that the executor knows what they are doing, otherwise they're going to end up getting the tourist exchange rate (see my earlier post) and you are going to end up losing around 3% of your inheritance, which is not an amount to be sniffed at when we are talking about £50,000! :rolleyes:
(i) I believe that the double taxation treaty does apply, but I'm not sure what else you are getting at? They'd know if you declare it for tax purposes, but you'll be in a big mess if you don't declare it and if you should have (and I still don't know if it would be taxable in the US).

They'd know within 15 days of the money hitting her US account. Under the Patriot Act- any transaction in excess of $10,000 has to be reported to the IRS within 15 days.
Pulaski you were right about the amounts any transaction or even purchase in excess of $10,000 has to be reported both to the IRS and FinCen. Any transaction in excess of $3000 has to be recorded with full details of the account holder and kept for 5 years. The Bank Secrecy Act has been in force since the '70's, as you said, but the Patriot Act has ammended the BSA 52 times since Oct 2001, CTR and SAR have been expanded to the point that you don't have to be suspected of money laundering or terrorism- any transaction deemed unusual (compared to the history of your account) has to be reported. The FBI has carte blanche to pull anyone's account - they don't have to give a reason. And all law enforcement agencies can freely download all of CTReports from the FinCen site- anytime they like. We wouldn't know if feds of any agency had been crawling all over our accounts- its all done in secrecy- they probably have if you're not a citizen. (BTW they also have complete freedom to pull anyone's credit report and read our emails etc) Can you say Orwell? Knew you could LOL.

Getting back to the tax- my understanding is that the donor or estate pays gift tax or inheritance tax, not the recipient- and there are tax exempt limits- no idea what they are though, but I do know that gifts and inheritance are not classed as income unless its an IRA, annuity or something that generates income. This has to be checked out with a professional or phone the IRS themselves- they have a help line, and they WILL get a report of your transfer of funds.
In UK - an estate had to be over a certain amount before inheritance tax kicked in- 350,000 pounds, or was it 450,000 - I can't remember, and they've, hopefully, increased the tax exempt limit by now.

They upped it in the last budget to I think GBP275k, but well behind estate value inflation.

Most people if they wn a house, especially in the South will have an issue.

The option is to Die Broke, there is a book of that title, or become a Skier - Spend the Kids Inheritance

I think I'm getting more confused! I know that there is a double taxation treaty between England and the US, but as I'm not sure if we will be taxed on the sale of the house in England, therefore would I be exempt from tax here? I'm basically leaning towards just wiring the money into my account, filling out the appropriate forms and declaring it, but I don't want to open myself up to paying huge amounts of tax if there is a way around it - I seem to pay enough tax as it is! Obviously I am not going to do anything illegal, I just want to do what is in my best interest!

No, no, no! Tax on any profits on your house is mostly exempt under US law. There are exceptions, like if the gain is more than $500,000, or if you haven't owned it for two years when you sell it, but for the most part you have nothing to worry about when it comes to tax on the proceeds of your home.