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Will I be taxed if I receive an international gift?
Anonymous6 views4 answers
My grandfather owned a piece of land in a foreign country (Vietnam), which he recently sold and would like to give me the money as a gift. If he send me the money through an international wire transfer, will I have to pay income tax on it? are there any forms I need to file with the IRS before receiving the transfer?
No, you will not have to pay U.S. income tax on a gift from your grandfather. The U.S. Tax Code specifically excludes gifts from a person's taxable income. In the U.S. tax on gifts over a certain size (i.e. gift tax) is the responsibility of the person making the gift, not the person receiving the gift. A quick online search suggests that Vietnam does not have a gift tax. But your grandfather may wish to confirm that he does not need to file anything or pay tax in Vietnam.
Gifts do not count as income, but even so there may be some disclosure requirements to the IRS depending on the size of the gift (anti-terrorism / anti money laundering). Your accountant may know the answer to this one. If the amount is small it shouldn't be an issue, but you should find out what the threshold is. Check out IRS Form 3520 when talking with your accountant.
The gift tax is levied upon the person making the gift (donor) rather than upon the person receiving the gift (donee). Thus, any gift tax your grandfather may be subject to would occur in Vietnam rather than in the United States. However, if the money generated via land sale is greater than $100,000 USD, you must file Form 3520 and specifically address the amount of the gift on Line 54. Moreover, be aware that both late filing penalties and failure to file penalties for Form 3520 are significant, assuming Form 3520 must be filed.
