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(I tried looking in other questions here if this has been asked, but not yet so I am posting)

Hi Everyone

I would like to know if I need to pay gift taxes if I am going to transfer ~68K USD to my daughter. I am a Filipino citizen but permanent resident in the United States (green card holder), and I have obtained the money legally from working here in US. I want to buy a house in the Philippines and put the title under her name. I am wiring 68K to her but I do not know the tax consequences in both countries.

For those familiar with US Laws, do I need to pay gift taxes? Is it possible to minimize it by some kind of a strategy, but of course still legal?

And those familiar with Philippine Laws, do I need to pay gift taxes as well there? Won't I suffer from over taxation lol

To add, she is already legally working in the Philippines, she is 28 years old.

Thanks in advanced to all who will answer.

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Yes, you as the giver will owe US gift taxes if you give her that sum directly.

You can reduce it by taking advantage of the threshold being by person. So, for example, if you and your wife each gave your daughter $17k, you'd individually be under the threshold and wouldn't owe gift tax, even if the money comes from and goes to the same account.

Given the time of year, you could give her that now and another $34k in January (next tax year) and avoid the gift tax. If she doesn't need all the money immediately, that's the simplest solution.

If she does need it all now, and you don't want to try arranging to "launder" the money through relatives' gift allowances (which I think would be legal and legitimate, actually), the other solution is to set this up as an intra-family loan. Web searching that phrase will find details, but it essentially lets you spread the gift over multiple accounting years and pay income tax on a minimal amount of interest (can be under 0.3%, which you'd also gift her with) rather than paying gift tax. It does require some paperwork to document and track it properly, but it isn't bad. (I did this when making a large "bridge loan" to help a relative buy their new house before the old one had sold. In that case it really was a loan, though; I'm being paid back out of the proceeds from the sale.)

  • Hi Keshlam, thanks. Unfortunately, my wife has already died so I cannot take advantage of the $34K max non-taxable. I wonder if I open a Philippine Bank account, convert $68K to Phil Pesos under my name, and from there use online transfer from my Phil Bank to hers. Will I avoid gift tax this way? Reason why I want to transfer $68k now all at once is that I want to take advantage of high exchange rates today. Next year is election season in Phils and it tends to make USD lower than Peso. What do you think? – anhuatthai23 Oct 15 '15 at 16:00
  • and also I read about the lifetime exclusion rate, can I use it? – anhuatthai23 Oct 15 '15 at 16:04
  • @anhuatthai23 If your daughter is married, you could also give 17k both to her and her spouse. – Daniel Oct 15 '15 at 16:08
  • @anhuatthai23 You can also use the lifetime exclusion. As long as you aren't going to be giving 5.4 million dollars in gifts over your lifetime, you shouldn't have to pay any tax. – Daniel Oct 15 '15 at 16:09
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    @anhuatthai23 that I don't know. I would highly recommend taking with a tax expert before trying something like that. – Daniel Oct 15 '15 at 17:53

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