US gift taxes for US Persons

3 min
Published on: 28-03-2024 Last modified on: 28-03-2024

For US citizens and resident aliens living abroad or with financial ties across borders, understanding the rules surrounding gifts can be crucial. The IRS has specific guidelines on the tax implications of giving and receiving gifts, whether these come from within the US or from abroad. 

Can I give a gift to my child? Do I declare this?

Yes, you can give a gift to your child, and whether you need to declare it depends on the amount. 

The IRS allows US persons to give a certain amount as a gift without needing to report it. This amount, known as the annual exclusion, is subject to change but has been set at $18,000 (tax year 2024) per recipient per year in recent years. If you give more than this amount to a single recipient in a year, you must file a gift tax return using Form 709. However, even then, you might not owe any gift tax due to the lifetime gift and estate tax exemption, which is significantly higher.

What happens when I receive a gift from a non-US Person or a US Person? Do I need to declare it in my filings?

  • From a US Person

Generally, if you receive a gift from another US person, you do not need to declare it in your tax filings, and there is no tax due on receiving the gift. The obligation to report the gift and potentially pay gift tax (if applicable) falls on the giver, not the recipient.  

  • From a Non-US Person

If you receive a gift or bequest from a non-US person, you may need to report it if the total value of gifts from that person exceeds a certain threshold in a tax year. For non-US persons, this threshold has been set at $100,000 for gifts from an individual or estate, or $16,388 (subject to change) for gifts from foreign corporations or partnerships. You report these gifts using Form 3520, not to pay tax, but to disclose the transaction.

Do I have to pay tax?

  • On gifts given

If you give a gift exceeding the annual exclusion amount, you must file Form 709, but you may not necessarily owe tax due to the lifetime exemption.

  • On gifts received

As the recipient, you generally do not pay tax on gifts received, regardless of whether the giver is a US or non-US person. The requirement to report certain large gifts from non-US persons does not equate to owing tax on those gifts.

What forms do I need to use?

  • Giving gifts

Use Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” to report gifts exceeding the annual exclusion amount.

  • Receiving Gifts from a Non-US Person

Use Form 3520, “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts,” to report gifts from non-US persons that exceed the reporting thresholds.

However, it’s crucial to Inquire with your local accountant about the tax implications in the country where you reside.

Need more information about US gift taxes for US Persons?

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with US gift taxes for US Persons.

Contact us for more information

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