Tax Law (Questions About Taxes)/Oversea Gift Tax

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Question
I have a friend oversea who I had helped to feed and clothed his family. Now many years later he has come into some wealth and he wants to share some with me. What is the gift tax or is there any ??
Wire transfer from his bank to my USA bank.

Answer
Dear Allen,

Thank you for this question, it raises couple of valid points.

First: What is Gift Tax? Gift tax is a tax imposed on US citizens, Green Card holders to prevent them from escaping Estate tax. Gift tax is perhaps the most misunderstood of all taxes. When it comes into play, this tax is owed by the giver of the gift, not the recipient.

Having said that IRC 220.50 state that "A nonresident alien individual who made a gift subject to gift tax must file a gift tax return if:

(1) the individual gave any gifts of future interests;

(2) the individual's gifts of present interests to any donee other than the individual's spouse total more than the annual exclusion amount ($14,000 for 2013; $13,000 for 2010 thru 2012); or

(3) the individual's outright gifts to his or her spouse who is not a U.S. citizen total more than the annual exclusion amount for such gifts ($134,000 for 2010, $136,000 for 2011, and $139,000 for 2012; $143,000 for 2013) (Rev. Procs. 2009-50, 2010-40, 2011-52)."

So getting back to you situation, if your friend gave you more than $13,000 in 2012, he/she would be subject to Gift tax, form 709.

I hope this answered your question.

Regards,
Abraham Itani, CPA

P.S. please rate my answer.  

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ABRAHAM ITANI, CPA

Expertise

TAX QUESTIONS DOMESTIC AND INTERNATIONAL OUTBOUND AND INBOUND. FBAR COMPLIANCE. CORPORATE, PERSONAL, PARTNERSHIP, PASS TROUGH ENTITIES, S-CORPORATION, LLC, TRUST, GIFT TAX, 1120, 1040, LATE FILING, NON FILING, AMT, FTC.

Experience

MORE THAN 10 YEARS OF STATE AUDIT TAXATION, MORE THAN 10 YEARS OF PRIVATE AND PUBLIC TAX EXPERIENCE WITH ITANI ACCOUNTING AND TAX, KPMG AND MNP. DEALING WITH HIGH NET WEALTH INDIVIDUALS, LARGE PARTNERSHIPS, EXPAT., CFC AND PFIC. DEALING WITH TAXING AUTHORITY ON ISSUES OF NON FILINGS AND LATE FILINGS.

Organizations
MEMBER OF AICPA, AND NJSCPA.

Education/Credentials
CERTIFIED PUBLIC ACCOUNTANT IN NEW JERSEY AND COLORADO.

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