From:  Georgeo
Date:  Mon, 11 Apr 2011
Subject:  Foreign Gift

Dear Michael Gray,

My father lives outside the United States. He made a gift to me of $50,000 cash. The money is deposited in a foreign bank account. I don’t intend to transfer this money to the United States. I am a US citizen. My father is a foreign citizen.

Do I have to let the IRS know about this money? Is the gift taxable?

I would appreciate if you help me with the above matter.

Thank you

Georgeo

Answer

Date:  Mon, 16 May 2011

Hello Georgeo,

Yes, you do need to let the IRS know about the foreign bank account. It is reported on Form TD F 90-22.1. You can get the form at the IRS web site, www.irs.gov. The form is informational, and no payment is due with the form. The 2010 form is due on June 30, 2011.

The interest for the bank account must be reported on your individual income tax return. US citizens are taxable on their worldwide income. If foreign tax is withheld on the interest, you may be eligible to claim a foreign tax credit. There is a box at the bottom of Schedule B where you must state that you have a foreign bank account with a balance of $10,000 or more.

A gift is not reported as taxable income. Foreign gifts of $100,000 or more must be reported on Form 3520. Form 3520 is due on the date your individual income tax return is due, including extensions.

Good luck!

Mike Gray

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