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I have an overseas account to which my uncle in Asia transfers money. Do I have to report these deposits as income on my United States taxes? Or do I report the money when I transfer it into my bank here in the United States?
Assuming that your uncle is transferring the funds into your account as a gift to you and not as consideration for goods or services you provide, then the gifts are not subject to United States income taxes. But you may still have filing requirements. If the value of your foreign bank account exceeds $10,000 at any time during the year, you are required to file an annual Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1). In addition, when you file your U.S. income tax return, you must attach Schedule B (reporting interest and dividend income) and complete Part III.
Although gifts to an U.S. citizen from a person who resides outside of the U.S. are not subject to U.S. income taxes, there may be an informational filing requirement. If a U.S. citizen receives a gift (including bequests) of $100,000 or more from a foreign person or entity, he or she must file IRS Form 3520 with the U.S. citizen’s income tax return in order to report the gift. There will be no tax on receipt of the gift, but the IRS can assess penalties if Form 3520 is not filed.
Edward A. Melia is a certified public accountant and an attorney in Sacramento. You may contact him at (916) 441-2006(916) 441-2006 or at firstname.lastname@example.org.
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