Gifts From a Foreign Person/Non-Resident Alien.

By Alex Oware on 06/24/2015 10:00 PM

QUESTION: I received a gift ($50,000) from a relative in another country. It’s the only income I received in 2015. Do I need to file a tax return?



ANSWER: You did not explain the reason for these gifts, but I would point out that if the purpose is to pay tuition, higher educational expenses, or qualified medical expenses for a person residing in the US, these are regarded somewhat differently by the IRS.

 They are not technically considered foreign gifts, so as such, there's no requirement for filing the informational 3520 form.

The short answer is NO, there’s no need to report it. However, if you received more than $100K from a non-US person. You have to report it, and unless it is taxable income - it is a gift. Taxable income is reported on the form 1040; gifts are reported on the form 3520.

This instructions on form 3520 makes this requirement clear enough, see the quote below.

You must file form 3520 if: You are a U.S. person who, during the current tax year, received either: a. More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or b. More than $15,358 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts. Since you received $50k  from an individual in a foreign person, option (a)  applies because the gift was  under $100K,  thus you have no filing requirement.

***Disclaimer: I am a tax accountant and a CPA , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**