NorthYorkshirelass

Advice needed on receiving money as a gift into a US checking account.
We have $40,000 being gifted to us from family in Italy, by wire transfer, into our joint account in the US at a credit union.

My concern is with receiving that money and the tax man.
If they transferred all the funds in one go, how do I 'declare' that money, on my yearly taxes, on say turbotax? I usually get back about $2000 dollars a year in refund, would I end up owing money, if so, any idea how much, if we receive all that money in one go this year? I don't mind a couple hundred, but would I be owing taxes of about $5000 or something that high?

I read a couple of websites saying send it in $9000 dollar chunks, and to only receive a certain amount a year, and then I don't have to declare it at tax time. Anyone know anything about that? Can we each receive x amount and not put it down on turbotax? If so, maybe sending in a few chunks is the way to go? How much can we receive a year?

Also, $20,000 would immediately go out of the account to pay off some moving debts we incurred, so would be out of our account in a day. Does that change anything about the best way to send it?

If anyone has knowledge of how to receive money without losing a massive amount of it (massive amount to me would be $5000, but maybe it would be more?) to paying tax on it, please let me know!

Pulaski

I am not qualified to comment on the tax treatment - but do NOT send it in $9,000 chunks, or any other odd pattern to try to game the system. No good will come of such shenanigans.

According to the gifts FAQs on the IRS web site there is an annual exclusion of $14,000 received per individual. So you should, I think, be able to receive $14,000 each (assuming "we" are two people). ..... Can you defer receiving the balance of $12,000 until 2016 i.e. next tax year?

bruceba

A foreign person can gift you whatever they want. $40000. does not require you to report. The gifting rule of 14k does not apply in this case.
Pulaski is right about not doing the $9k transfer. Do it all at once you have no US tax liability.

MidAtlantic

This link will help you:

Frequently Asked Questions on Gift Taxes

It is the donor who is normally responsible for any gift tax.

I agree with others, do not send in smaller chunks. Have the whole amount sent at one time. As routine procedure the bank will report any transaction over $10,000 to FinCen but you have a clear explanation of the transaction.

Tarkak9

Are the family, and spouse, US citizens? Is this part of somesort of early estate disbursement? It has been my understanding, if they are then no reporting requirement is necessary as the recipient (its the 'giftor' who files their gift etc on their taxes) and you, shouldn't have a tax consequence. i.e inter-USC exchanges then you are ok.

what also has been my understanding, from a tax person that, if you (yorkshirelass) received a gift from a non resident alien then you would have had to complete Form 3520 to report the gift but again no actual tax would be due on the gift. i.e. is this applicable to you

It certainly not advantageous to transfer the gift in the form of conveying stocks etc b/c you would be taxed (esp as cap gains) and its done as cost basis so you would need to know the value of the individual stocks at time of original purchase.

Anyone can give such 14k cash exemption, so you are concerned about it, then you could break it up as installments per year.

Every person's scenario and situation is their own so definitely confirm and consult with relevant professional. Additional questions to ask - does filing jointly or separately affect the situation? Following that, can each receive amounts separately and will that affect the situation. It is wise to do your diligence and xfr the gift accordingly!!

Pulaski

This is important. And it is trying to stop the report being filed, by sending multiple smaller wires, that can have consequences that really don't want. The reporting is of no consequence if you have nothing to hide, as is clearly the case for you.

Michael

Even if it is a US citizen doing the gifting, the $14,000 per tax year per person limitation is only for "not reporting" the gift but up to $5.25 million can be gifted over a lifetime free of gift tax but has to be reported and will be deducted from the maximum tax free $5.25 million estate on death.

Foreign gifts under $100,000 normally do not have to be reported.

Gifts from Foreign Person

nicolatwig

Has anyone used QNUPS or QROPS? I am selling/sold my UK property on avoid the new tax changes and am thinking of using Momentum in Malta. Has anyone used this or other QNUPS? Also, what are the charges? My charges would be 1000 set up fee, 1000 a year from Momentum and .25% from the adviser? I have about 7 years before I would start draw down.

Any comments/feedback would be appreciated

Cook_County

Are you a US person? If so you will owe US tax on the gain on the home and on the pension transfer.

nicolatwig

I am a no resident of the UK for 20 years and am a Green card holder here

Pulaski

£1,000 set up plus £1,000/yr, plus 0.25% (/yr?) Those are pretty serious charges! You'd better be saving some serious expenses somewhere else.

nicolatwig

The savings would be no CGT gains on the house I sell. Plus no IHT issues in UK or US. 30% withdrawn with no taxes then taxes on income on rest of money. I am not sure how else I can avoid bringing the money into the US without tax consequences? Then if I bring it in then it will have to go into a taxable account which has dividends and taxes each year. Any suggestions? The amount invested is 400,000 so after those expenses taken out I wonder if i can still make 5 to 6% for the next 7 years?

Pulaski

If you haven't lived in the UK, and therefore your house there, for 20 years, how is not paying CGT legal?

Despite QROPS being discussed from time to time on the US pages of BE, nobody here has been able to cite an example of actually getting a QROPS to work. If you have money in a bona fide pension account in the UK there doesn't appear to be any reason, that I can make sense of, to move those pension accounts out of the UK. The "solutions" to the "problem" just appear to generate lots of fees and expenses.

nicolatwig

Thanks for your help. I am probably not explaining it in a clear way. I do not have a pension in the UK. I inherited the house and with the tax laws in the UK changing as of this year, it does not seem wise to keep the investment in the UK

Pulaski

So you have inherited a house? There are no US tax consequences. ...... Given that QROPS are for pensions, where do QROPS enter the picture?