Q: Is a gift of a significant amount being taxed in the US if I receive it from a sibling living abroad in my home country
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- California
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A:
In the United States, recipients generally don't pay federal gift tax - instead, the person giving the gift is responsible for any tax obligations. However, you should be aware that international gifts over $100,000 from foreign individuals must be reported to the IRS using Form 3520.
If your sibling sends you money from abroad, you'll need to report this gift on Form 3520 by the due date of your annual tax return. While you likely won't owe any federal tax on the gift itself, failing to report it could result in significant penalties - up to 25% of the gift amount.
Some additional considerations apply to your situation. You should keep detailed records of the gift transfer, including documentation showing the source of funds and any relevant banking paperwork. Additionally, depending on how the money is transferred, you may need to report it to FinCEN if it exceeds $10,000. While California doesn't have its own gift tax, you should consult with a tax professional who can guide you through the specific requirements based on your circumstances and the gift amount.
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