Let's say person A is person B's dad. Person A lives in Europe and is not in any way a US citizen/resident etc... Person B is a US resident (is there a difference between citizen and just a resident?).

Person A wants to send person B a gift of 1 million US dollars. This money was earned by person A outside the US and income tax was paid for it outside the US.

Does person B have to do anything specific so that he won't be taxed in the US for this gift? I have read online on multiple sources that all gifts over $100,000 have to be reported to the IRS via form 3520. But it's not clear to me if this absolves person B of paying anything for this gift?

  • 3
    Since I see no indication that you must record anything from 3520 onto your 1040, it looks to me like you just file the form as an indication of "here's how I legally obtained all that tax-free money". – RonJohn Jan 14 '18 at 6:48

There is no U.S. federal tax payable by the recipient of a gift. Failure to file 3520 may result in a penalty (not a tax). Based on my reading of the Penalties section of the 3520 instructions, the penalty for not filing is $10,000.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.