Is receiving $10,000 annually from friends legally and what are the tax implications?

Question

I live in the US, and my father resides in a Middle Eastern country. Due to a broken banking system, he can't send money directly to me. He arranges for friends in the US to transfer around $10,000 annually to my account through Zelle or check payments. He reimburses their families in cash in his country, but these transactions are undocumented. No flags have been raised about these transactions in the US. Is this arrangement legal, and are there any tax implications I should be aware of?

James L. Arrasmith · Answer

Receiving $10,000 annually from your father's friends in the U.S., who are reimbursed by your father abroad, is generally legal and does not have direct tax implications for you as the recipient. In the United States, recipients of gifts are not required to pay taxes on the amounts received.  
 
However, the individuals sending you the money should be aware of the annual gift tax exclusion limits. For 2025, each person can gift up to $19,000 per recipient without needing to file a gift tax return. Since the amounts you're receiving are below this threshold, the senders typically wouldn't need to report these gifts. 
 
It's important to note that structuring transactions to avoid reporting requirements, such as breaking down larger amounts into smaller ones, can be considered illegal. Ensuring that all transactions are transparent and properly documented helps maintain compliance with U.S. financial regulations. 
 
While you, as the recipient, don't have tax obligations for these gifts, it's advisable to keep records of the transactions. This documentation can be useful in case any questions arise regarding the source of the funds. If you have further concerns or if the amounts increase in the future, consulting with a tax professional can provide personalized guidance.

Q: Is receiving $10,000 annually from friends legally and what are the tax implications?