Gift Tax for Money gifted from Non Resident Alien? Ways to handle large transfers?

The annual gift tax exclusion applies per recipient, so your uncle can indeed gift $17k to you and another $17k to your sister without triggering any gift tax reporting requirements. This is sometimes called "gift splitting" and can be very effective for distributing larger amounts. For the larger sum you mentioned, there are a few things to consider. First, it's important to understand that as a recipient, you don't pay the gift tax - the donor does. Since your uncle is a non-resident alien, different rules apply. Non-resident aliens are subject to U.S. gift tax only on transfers of U.S. real property and tangible property located in the U.S. Importantly, money in U.S. bank accounts is considered an intangible asset, so it's actually exempt from U.S. gift tax when given by a non-resident alien. Your uncle could potentially transfer the entire amount to you without U.S. gift tax implications. However, be aware that large transfers may trigger bank reporting requirements under anti-money laundering regulations.

I went through almost this exact scenario last year with my aunt transferring money from her US account. I was worried about the tax implications until I found this AI tax assistant at https://taxr.ai that analyzed our specific situation. It confirmed what Profile 8 mentioned - that as a non-resident alien, my aunt could transfer intangible assets like bank funds without US gift tax. The tool also highlighted some important considerations that saved us headaches. It warned about FBAR requirements if you have foreign accounts over $10k and suggested documenting everything as a gift with a simple gift letter. It also mentioned some state-specific considerations I hadn't thought about.

Just wanted to follow up and say I tried the taxr.ai service that was mentioned. I was going through something similar with my grandfather wanting to transfer some savings to me from his US account (he's a permanent resident of Spain). The analysis confirmed I could receive the funds without gift tax since it falls under the non-resident alien exception for intangible property. What I found most helpful was the documentation guidance - created a proper gift letter that satisfied the bank's compliance department. Also learned about some reporting requirements I never would have known about. Really saved me from making some potentially costly mistakes. Just thought I'd share since my situation was so similar to the original post.

If you're still having trouble reaching the IRS to confirm any of this (which was impossible for me), I had success using Claimyr https://claimyr.com to actually get through to a human at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed to verify some details about non-resident alien gift rules for my dad's situation and was pulling my hair out trying to reach anyone at the IRS. Claimyr got me through in about 20 minutes when I had previously spent HOURS on hold and getting disconnected. The IRS agent confirmed everything about the intangible property exception and gave me peace of mind about proceeding with the transfer.

Well, I need to eat some humble pie here. After my skeptical comment above, I decided to try Claimyr myself since I've been getting nowhere with the IRS for weeks about my own non-resident gift situation. I was shocked when I actually got connected to an IRS representative in less than 30 minutes. After explaining my situation (similar to the original poster's), the agent walked me through exactly what forms would and wouldn't be required and confirmed the non-resident alien exception for intangible property. The agent even told me about Form 3520 requirements for recipients of large foreign gifts that none of the online articles I read had mentioned. Apparently, if you receive more than $100,000 from a foreign person in a year, you need to report it on this form - even though no tax is owed. Would have been a nasty surprise without that info.

Just to add another perspective - make sure your uncle has no U.S. tax residency status. If he's considered a resident for tax purposes (like spending too many days in the US or holding a certain type of visa), then different rules apply and he'd be subject to the same gift tax rules as U.S. citizens. The substantial presence test looks at days spent in the U.S. over three years. Some non-resident aliens might accidentally qualify as tax residents without realizing it.

One thing nobody's mentioned - consider structuring the gift as a loan initially, with forgiveness of a portion each year equal to the annual exclusion amount. This can be a legal way to transfer large sums while avoiding gift tax.

I want to emphasize something important that was briefly mentioned but deserves more attention - the Form 3520 reporting requirement. Even though you won't owe any gift tax as the recipient, if you receive more than $100,000 from a foreign person (which includes non-resident aliens) in a tax year, you're required to file Form 3520 with your tax return. This is purely informational reporting - no tax is owed - but the penalties for not filing can be severe (up to 35% of the gift amount). Since your uncle is transferring $100k-$200k, this will definitely apply to your situation. Also, regarding the bank reporting mentioned earlier, make sure to give your bank a heads up about the incoming transfer. I'd recommend preparing a simple gift letter stating the relationship, that it's a gift with no expectation of repayment, and the source of funds. This helps avoid any holds or complications with the transfer. The good news is that the core advice here is correct - as a non-resident alien gifting intangible property from a U.S. bank account, your uncle shouldn't owe U.S. gift tax on the transfer. Just make sure you handle the recipient reporting requirements properly.