Do I need to pay tax with foreign wire transfer received from parents (non-US residents/citizens) living in another country? (2024)

FAQs

Do I need to pay tax with foreign wire transfer received from parents (non-US residents/citizens) living in another country? ›

The transfer of funds to you, itself, is not taxable. However, if the transfer exceeds $100,000 (U.S.) and it is being deposited into an account in your name only, it would be a reportable gift from a foreign person.

As a general rule, when a gift comes from a nonresident foreign national, the recipient is usually not taxed on the gift itself, and it does not count toward gross income. That's because the IRS does not have jurisdiction over gifts that come from overseas from nonresident, non-US citizens.

For gifts or bequests from a nonresident alien or foreign estate, you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate exceeds $100,000 during the taxable year.

You do need to pay tax on wire transfers sent to a foreign bank account, if the transfer exceeds a certain sum. Any amount over $16,000 sent to a foreign bank account is likely to be considered as a taxable gift by the IRS.

The IRS won't tax you on money you receive from any nonresident alien overseas. However, if the gift exceeds $100,000, you will need to file a Form 3520 (you won't be taxed—you just need to report it.) You may be required to pay taxes on the inherited assets, though, depending on what state you live in.

It is important to note gifts of money or property may be subject to federal gift or estate tax, depending on the value of the gift and the way it is given. If tax liability is incurred, it is the donor - not the recipient - who pays the tax. Estate tax, if required, is typically paid from the deceased donor's estate.

International money transfer limit: IRS

The IRS doesn't place limits on the amounts of money being sent, but there are reporting requirements for payments valued at 10,000 USD or more — or individual payments made within a short period which in total add up to over 10,000 USD.

Each year, the limit on how much of your foreign-earned income may be exempt is adjusted for things like inflation. For the tax year 2022, the limit was $112,000 per person. For 2023, the limit was increased to $120,000 per person.

Foreign Bank Account Report (FBAR)

If the international transfers you make to the US come from a foreign financial account containing $10,000 USD or more at any point in the year, you must file an FBAR.

Is it safe to receive an international wire transfer? ›

Wire transfers are generally safe and secure, provided you know the person who's receiving them. If you use a legitimate wire transfer service, each person involved in a wire transfer transaction should be required to prove their identity so that anonymous transfers are impossible.

A gift tax is a government tax imposed on those who give money or property to others in exchange for nothing (or less than total value). There is typically a tax-free gift limit to family members until a donation exceeds $15,000 (jumping up to $16,000 in 2022). In these instances, the IRS is usually uninvolved.

In the United States, money gifted or transferred to you from foreign sources, such as family members from abroad, is generally not considered taxable income.

Amounts more than $14,000 gifted to the same person in one year have to be reported to the IRS on the Form 709. No tax has to be paid on the amount, the amount gifted just has to be reported. This is the way that the IRS keeps track of how much U.S. persons have gifted away.