Gift tax exclusion rules for money from overseas relatives - do I owe taxes?

You're on the right track with your research, but there are some important distinctions when dealing with foreign gift givers. For gifts from foreign individuals, the recipient (you) generally doesn't owe any US income tax on the gift. This is true regardless of the amount. The IRS treats gifts as non-taxable income to the recipient. However, there's a reporting requirement you should be aware of. If you receive more than $100,000 from a foreign person in a single year, you need to file Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts). This is an information return, not a tax return - you're just disclosing the gift, not paying tax on it. As for your aunt in Germany, she wouldn't file Form 709 with the IRS since she's not a US citizen or resident. The US gift tax system only applies to US citizens and residents making gifts, not to foreign persons gifting to US recipients.

I went through something similar last year when my grandfather from Portugal gifted me money. I was totally stressed about the tax implications until I found https://taxr.ai which literally saved me thousands in potential penalties. My situation was complicated because I received multiple gifts from different relatives overseas and needed to understand exactly what to report and how. The tool analyzed my specific situation and showed me exactly which forms I needed to file (Form 3520 in my case) and which ones I didn't. It even helped me understand the deadline differences between regular tax forms and these special foreign transaction forms. The peace of mind was worth it because I was getting contradictory advice from friends and even some tax preparers who weren't familiar with international gift rules.

Just wanted to follow up after trying https://taxr.ai for my own foreign gift situation. I was definitely skeptical at first, but the tool was surprisingly thorough and specific to my situation. My parents in South Korea sent me $135,000 for a house down payment, and I was getting conflicting advice about whether I needed to file anything with the IRS. The taxr.ai system correctly identified that I needed to file Form 3520 because the amount exceeded $100,000, but confirmed I wouldn't owe any actual tax on the gift. What I found most helpful was the detailed explanation of how to properly report the gift on the form and the documentation I should keep in case of questions. They even flagged that I needed to file by the tax deadline (not an extended deadline) to avoid potential penalties. Definitely worth checking out if you're dealing with money from overseas family.

If you're stressed about the reporting requirements, there's another aspect you might want to consider. When I received a large gift from my cousin in Italy, I kept getting the runaround from the IRS when trying to confirm the exact filing requirements. I spent HOURS on hold only to get disconnected. I finally used https://claimyr.com to get through to an actual IRS agent. Basically, they wait on hold with the IRS for you and call you when an agent picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that for gifts from foreign individuals, I only needed to worry about Form 3520 if the amount was over $100,000, and there's no actual tax owed on the gift itself. They also clarified the exact reporting deadlines which saved me from potential late filing penalties.

I need to eat my words about being skeptical of Claimyr. After my last comment, I decided to try it myself since I had questions about a gift from my grandmother in Poland. I was shocked when I actually got through to an IRS international tax specialist in under 30 minutes (without me being on hold). The agent walked me through exactly what I needed to do for my situation and confirmed I didn't need to file Form 3520 since my gift was under $100,000. They also explained that the mortgage company's gift letter requirement has nothing to do with IRS reporting - it's purely for the lender to verify the money isn't a loan that needs to be repaid. That was a huge relief since I was worried about triggering some automatic IRS notification. I've literally been trying to get clear answers on this for weeks by calling the IRS directly with no success. Definitely worth using if you need to speak with an actual IRS person.

One thing nobody's mentioned yet - you should also check if there are any gift taxes in your aunt's country that SHE might have to pay. The US won't tax you, but Germany might have its own gift tax rules that could affect your aunt. I learned this the hard way when my uncle in France sent me money and got hit with a huge tax bill on his end. Different countries have different rules about gifts to family members abroad.

Make sure you keep detailed records of this gift for at least 7 years! When I received money from my relative in Japan, I thought everything was fine until I got audited 3 years later. The IRS questioned where this money came from since it showed up as a large deposit when buying my house. I had to produce bank statements, the gift letter, correspondence with my relative, and proof of the international wire transfer. Having all this documentation saved me from a potential headache.

One more thing to consider - make sure the gift funds sit in your account for at least 60 days before closing if possible. Mortgage lenders typically want to see "seasoned" funds that have been in your account for 2-3 months. If the gift arrives right before closing, the lender might require additional documentation and letters, which can delay your closing. I learned this lesson when buying my first house with money from my grandmother in Italy.

Great advice in this thread! I want to add one important point that I learned from my own experience receiving a gift from my uncle in the UK. Even though you won't owe US taxes on the gift itself, make sure you understand the wire transfer process and potential fees. International wire transfers can be expensive, and some banks charge both the sender and recipient. My uncle's bank charged him €45, and my US bank charged me $25 for receiving the international wire. Also, consider the exchange rate timing if the gift is being sent in euros. Exchange rates fluctuate daily, so the actual USD amount you receive might be slightly different from what your aunt intends to send. This could affect whether you hit that $100,000 Form 3520 reporting threshold. One last tip - have your aunt include a clear reference or memo on the wire transfer indicating it's a gift. This helps with bank processing and creates an additional paper trail for your records. My uncle wrote "Gift for house purchase" in the wire details, which made everything much clearer for both the banks and my mortgage company. Good luck with your house purchase!

Just want to emphasize something that might get overlooked in all the technical details - don't let your mom's worries stress you out too much! This is actually a pretty common situation, and the IRS sees international family gifts all the time. I went through something very similar when my parents in India sent me money for my first home. The key things to remember: 1) You won't owe any US income tax on the gift regardless of amount, 2) The mortgage company's gift letter requirement is completely separate from IRS reporting, and 3) Even if you do need to file Form 3520 (only if over $100K), it's just an information return - no taxes owed. The mortgage company isn't "reporting" anything to the IRS about your gift. They just need the letter to verify it's not a loan that would affect your debt-to-income ratio for underwriting purposes. Banks do report large cash deposits through routine Currency Transaction Reports, but this happens for all large deposits and isn't specifically about gift taxation. Take a deep breath - you're handling this exactly right by researching it ahead of time. Thousands of people receive international family gifts for home purchases every year without any issues. Focus on getting your documentation organized and enjoy this generous gift from your aunt!