My wife’s parents, who live in Vietnam, want to gift us $250,000 they got from selling their land. When they wire transfer the money to us in the United States, how do we file that money with the IRS? And do we get taxed on the money we will receive?
Assuming your wife’s parents (the "donors") are not U.S. citizens, U.S. resident aliens (green card holders), or U.S. expatriates, there is no tax liability associated with your receipt of the $250,000 gift. Because the gift from foreign persons exceeds $100,000, however, you are required to file Form 3520: Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts with the IRS. Failure to file Form 3520, when required, could result in the IRS assessing severe penalties totaling up to 25 percent of the gift amount. Gifts and inheritances from abroad can raise several complex tax compliance issues. We recommend that you speak with a tax return preparer or attorney with an international practice for further information.
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Answered by: James G. McGrory, CPA, and Stephanie K. Otake, CPA, are with Drucker & Scaccetti in Philadelphia.