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A friend of mine is Canadian and has lived in the U.S. for about 14 years as a permanent resident (green card) and he is buying a new home.
His parents are Canadian and they live in Canada. They have offered to give him a gift towards the down payment/closing costs/needed renovations, etc. of $70,000.
Will there be tax implications on this gift for him when he files his (U.S.) taxes?

Member Summary

No.

If there are any taxes they would be Canadian gift taxes and would paid by the parents. I don't know anything Canadian taxes. He would not have any taxes on the gift. It isn't even reportable.

As Treffen indicated, not reportable. However, if the amount was $100K or more or if $14,723 or more and came from a foreign corporation, he might have to file form 3520 page 1 and part IV to declare it but it wouldn't be taxable.

Make sure he gets documentation about it being a gift etc so he can provide it to the mortgage underwriter. They *will* ask about it.

wfay said:   Make sure he gets documentation about it being a gift etc so he can provide it to the mortgage underwriter. They *will* ask about it.

Who's documentation would he need to fill out? Would it be the bank's (or whomever he's getting a mortgage from?)

Apparently there are no gift taxes in Canada, so the gift has no impact on his parents' tax returns. It was just his U.S. tax return everyone was uncertain about. His parents wanted to make sure he wasn't going to be hit with an expensive tax bill that he wasn't expecting.

Parents need to write up a letter saying its a gift from them to your friend and sign it. Might need to get it notarize since its out of the country and its relatively large amount. If its the "standard" $14,000 gift within US, usually the lender just need a signed letter.

In US can get $14,000 in gift tax free for each person. So 2 parents to your friend, that is $28,000. If your friend have a spouse, that is $56,000. So you are almost there. Perhaps another $14,000 from this "uncle" or that "aunt" should take care of things.

tszyeung said:   Parents need to write up a letter saying its a gift from them to your friend and sign it. Might need to get it notarize since its out of the country and its relatively large amount. If its the "standard" $14,000 gift within US, usually the lender just need a signed letter.

In US can get $14,000 in gift tax free for each person. So 2 parents to your friend, that is $28,000. If your friend have a spouse, that is $56,000. So you are almost there. Perhaps another $14,000 from this "uncle" or that "aunt" should take care of things.


Not sure what you are referring to by "taking care of things."
1.) The bank may want to know where the money came from but it doesn't care about the $14K IRS annual exclusion limit.
2.) The giver (parents) in this case are not US citizen/resident. The $14K annual exclusion is non-applicable. Their might be Canadian taxes to worry about.
3.) For the receiver, there is no US tax due and it is also not a reportable event. Their might be Canadian taxes to worry about.

The following page sums it up from a tax perspective. Gifts from Foreign Person

Nice link! I'll email that to him.
There are no Canadian taxes on gifts, apparently, so that won't be an issue.

In terms of U.S. taxes, I was unsure whether the tax responsibility would shift to the "giftee" since the gift giver is not paying any U.S. taxes on it.

gooddealie said:   Nice link! I'll email that to him.
There are no Canadian taxes on gifts, apparently, so that won't be an issue.

In terms of U.S. taxes, I was unsure whether the tax responsibility would shift to the "giftee" since the gift giver is not paying any U.S. taxes on it.


No US tax. Nothing to report since it is under $100K.

Sweet, I just want to be the first to announce that I am willing to accept all gifts of less than 100K from anyone in another country and I will thank you profusely

tszyeung said:   In US can get $14,000 in gift tax free for each person. So 2 parents to your friend, that is $28,000. If your friend have a spouse, that is $56,000. So you are almost there. Perhaps another $14,000 from this "uncle" or that "aunt" should take care of things.
You are alluding to the annual exclusion from United States transfer taxes of de minimis gifts of a present interest. The United States assesses transfer taxes with respect to the transferor/donor, not the transferee/donee. The OP can receive any amount of property from anyone anywhere. As previously stated here, OP merely needs to report gifts if they exceed the applicable thresholds, as well as report beneficial interests in foreign financial accounts.

The United States only assesses transfer taxes upon non-resident aliens (as this term is used in the context of taxes, not immigration) for transfers of tangible property located within the United States. Trap for the unweary: bank deposits in a United States bank or a United States branch of a foreign bank will be treated as such. OP should ask his parents to wire him money or write him a check from their Canadian or other foreign bank accounts, rather than from an account in the United States. In the same vein, rather than his parents visiting him with $70k in gold bars as a gift, he should visit them in Canada where they shall gift it to him. All United States property should be in OP's name only and his parents should not have any incidents of ownership, so as to forclose the argument that the parents bought a fraction of the house which they then gifted to him.

We are all assuming that OP's parents have not set foot on American Soil (or bridge footings) often enough to preclude non-resident alien treatment under the internal revenue code. Yes, it is entirely possible people who are non-resident aliens for immigration purposes are treated as United States persons for tax purposes.

This message is written provoke more questions rather than to provide concrete answers - It is not intended to be used (nor can it be used) to avoid tax penalties, or for promoting/marketing/recommending to another person any tax-related matter.



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