Receiving gifts or inheritances from foreign sources involves specific tax considerations under U.S. tax law. Here's an overview of the tax treatment for U.S. persons (which includes citizens and resident aliens) receiving such gifts or inheritances:
Gifts or inheritances received from foreign individuals or estates are not subject to U.S. income tax. This means that if you receive a gift or inheritance from a foreign source, you do not need to include it as taxable income on your U.S. income tax return.
Although there is no income tax on foreign gifts or inheritances, there are reporting requirements if the amounts exceed certain thresholds. You must file Form 3520, "Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts," if you receive:
- More than $100,000 from a nonresident alien individual or a foreign estate that is treated as gifts or bequests.
- More than the annual threshold (adjusted for inflation) from foreign corporations or foreign partnerships that are treated as gifts. For example, the threshold was $18,567 for gifts received in 2023.