I am in the US on F1 visa - OPT, I need to send money to pay off my student loan in India. I have already sent about $25000 to my dad, who has paid it to the bank for my student loan and I am planning to send about $15000 more for the same purpose.

I think my dad does not owe any taxes, because in India there are no gift taxes, but I just read somewhere that in US I have to pay gift taxes for amount above $15000. I am a non-resident alien for tax purposes but that might change in October when my status will change to H1B. I am really confused here and I am not sure what to do. I want to pay off my student debt ASAP, but I also do not want to end up paying huge taxes here in US on my already taxed income.

I also read about something called a lifetime exemption on IRS gift tax, but I am not sure how does that work.

Looking forward to some suggestions.

  • 16
    Why do you think this should be considered a gift? This is not a gift in any way.
    – user91988
    Commented Sep 16, 2020 at 14:14
  • 2
    The lifetime exception basically says that any gift over the annual limit can be "charged" against the lifetime exception. It's essentially a non-issue, unless you plan on dying and leaving more than $11 million to your father.
    – chepner
    Commented Sep 16, 2020 at 14:16
  • 2
    Since you say 'parents' in the title, if it were a gift (which it isn't here), you could send $30000 in total to your mother and father in the US without any gift tax consequences.
    – Jon Custer
    Commented Sep 16, 2020 at 14:26
  • 3
    If you want to avoid any doubt about whether this is actually just a gift to support your parents, you could just pay it to the bank directly. Commented Sep 16, 2020 at 17:28
  • 4
    @NewBee The IRS might think that (idk how the IRS works, but it sounds possible). If the IRS asks you, "hey where did this money go, was it a gift?", then you show them the paperwork from India which says it went to the student loan, and they say "oh okay it wasn't a gift." If the paperwork doesn't match reality, it's the paperwork that is wrong, and you fix the paperwork! Wrong paperwork doesn't make a gift into a not-gift or vice versa. Commented Sep 17, 2020 at 10:12

1 Answer 1


What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.


If you send $40,000 to your dad, and your dad pays down your student loans by $40,000, then your dad has provided value to you equal to the transfer, so it is not a gift to your dad. You are simply sending the money to your dad for him to use on your behalf. If a store hands $10,000 over to an armored car driver to take to the bank, is this a "gift"? No, the driver is simply acting as an agent of the store, just as your dad is acting as your agent. Your dad isn't the ultimate recipient, just a courier.

This also isn't a gift to the bank you owe the loan to, as $40,000 in debt is being discharged, which is consideration in return for the money.

  • 1
    So, do I have pay any taxes on this money in the US ? Or do I have to report this on any of the federal tax forms ? Commented Sep 16, 2020 at 16:53
  • 12
    You have to pay taxes when you receive the money, but not when you send it. A gift tax is really a tax paid on behalf of the recipient. But that recipient must owe US taxes in order for you to owe a gift tax. Suppose you gave a large gift to your dad, who is not a US citizen. He does not owe a US gift tax, and therefore, neither do you. However, he may owe taxes to India. Commented Sep 16, 2020 at 18:33
  • 4
    I think there might be a tax reporting consequence, despite no actual tax consequence. It seems to me that FBAR is probably required - even if it's nominatively dad's account, since dad is just acting as an agent on OP's behalf, it seems to me like it probably meets FBAR criteria, no? (Though, perhaps a different question would be appropriate.)
    – Joe
    Commented Sep 16, 2020 at 19:21
  • I thought it would be considered gift because I am not paying the bank directly, and I don't know if IRS has a way of knowing what my dad is doing with the money, since he is neither a US citizen nor living in the US. IRS can only see where money goes from my account. I am not sure about this though. Commented Sep 17, 2020 at 1:19
  • @Joe Does this FBAR rule apply to me, because I am not a US citizen, so I don't think I am required to report my accounts outside the US, or am I ? Commented Sep 17, 2020 at 1:20

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