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Foreign Gift Tax Exclusion

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    #1

    Foreign Gift Tax Exclusion

    I don't know if anyone has any insight into foreign gifts, but I will ask the question anyway.

    I have a client who received a gift from her brother, who is a German citizen. My client wants to know if she and her husband can jointly exclude (up to $26K) of this gift from Germany. The information I have is only for domestic gift tax exclusion. Is there a gift tax exclusion in Germany?
    Tags: exclusion, foreign, gift
    #2
    I have always thought, unless otherwise specified, US tax law applied to US citizens worldwide. I am not aware of any specific provision for gifts from Germany, therefore, I would say the US gift exclusion would apply.

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      #3
      Gifts received are not included in income of the person receiving the gift. I would think that the gift tax exclusion would be an issue only if the donor was in the US, not the recipient.

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        #4
        Receiving gifts is not the issue. Only giving gifts involves exclusion issues.

        ADDED: TaxmannEA, Looks like we both posted at the same time....................
        Last edited by BOB W; 12-13-2013, 02:27 PM.
        This post is for discussion purposes only and should be verified with other sources before actual use.

        Many times I post additional info on the post, Click on "message board" for updated content.

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          #5
          Originally posted by taxdude View Post
          I don't know if anyone has any insight into foreign gifts, but I will ask the question anyway.

          I have a client who received a gift from her brother, who is a German citizen. My client wants to know if she and her husband can jointly exclude (up to $26K) of this gift from Germany. The information I have is only for domestic gift tax exclusion. Is there a gift tax exclusion in Germany?
          Your clients are the ones RECEIVING the gift, right? NONE of the gift is subject to tax. The $14,000 exclusion is for the GIVER.

          In the event the gift is over $100,000, then Form 3520 needs to be filed.

          Gifts from foreign person | Internal Revenue Service
          http://www.irs.gov/Businesses/Gifts-from-Foreign-Person
          If you are a U.S. person who received foreign gifts of money or other property, you may need to report these gifts on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return, because foreign gifts are not subject to income tax. However, there are significant penalties for failure to file Form 3520 when it is required.

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            #6
            RE: Foreign Gift Tax Exclusion

            Thank-you all for your excellent advice!

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