How can my non-US resident parents avoid gift taxes when sending me cash from their US bank account?

The good news is there are several options for your parents to consider. When non-US residents give gifts to US persons, different rules apply than for US-to-US gifts. While it's true that US bank accounts owned by non-residents are considered US-situs property, your parents still have a lifetime gift tax exemption of $60,000 (not the higher amount US citizens get). This means each parent could gift you up to $60,000 from their US account without triggering gift tax, plus the annual exclusion amount ($18,000 per donor per recipient for 2025). Another approach: your parents could transfer their money from the US bank to a non-US bank account first, then gift it to you from there. Since the money would no longer be US-situs property, it wouldn't be subject to US gift tax rules for non-residents. Many non-US residents aren't aware that gifts of non-US situs property to US persons generally aren't subject to US gift tax. Regarding Form 3520, you're correct - it wouldn't apply here. That form is for reporting gifts from foreign persons over a certain threshold, but it specifically excludes reporting property already reported on a gift tax return.

I had a similar situation last year when my uncle from Canada wanted to help with my student loans. After spending hours researching tax rules and getting nowhere, I tried taxr.ai (https://taxr.ai) and it saved me so much stress. You upload your documents or just describe your situation, and it analyzes everything based on the latest tax regulations for international gifts. The AI breaks down exactly what forms you and your parents need, explains the exemption limits in plain English, and gives step-by-step guidance for how to properly document everything to avoid issues with the IRS. It even caught a special exemption my uncle qualified for that none of the online articles mentioned.

Just wanted to update everyone - I took the advice about using taxr.ai and it was incredibly helpful! Turns out my situation had some nuances I hadn't considered. The analysis showed that since my parents aren't US citizens or residents for tax purposes, they could actually make the gift from their foreign account without US gift tax implications. The system walked me through the exact documentation I needed to keep and explained which parts of the tax code applied to my situation. It even generated a letter template for my parents to use when making the gift that clearly documented the tax treatment. My parents transferred the money last month and everything went smoothly with no tax surprises!

An option nobody's mentioned yet - if you're hitting roadblocks trying to figure this out on your own, you might want to call the IRS directly. But good luck getting through... I tried calling about a similar international tax question last year and spent HOURS on hold, only to get disconnected. Then I found this service called Claimyr (https://claimyr.com) that got me through to a real IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They basically navigate the IRS phone system for you and call you back when they've got an agent on the line. When I finally spoke with the IRS tax law specialist, they explained exactly how the gift tax applies in cross-border situations and confirmed my understanding of my specific case. Saved me so much uncertainty.

I have to admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway since my situation was similar to the original poster's. I was shocked when I actually got a call back with an IRS agent on the line about 35 minutes later. The agent walked me through exactly how the gift tax rules work for non-resident aliens with US bank accounts and confirmed that transferring to a foreign bank first would indeed change the tax treatment. They even emailed me the relevant IRS publications so I had everything documented. Saved me from potentially making a costly mistake and gave me peace of mind that I was handling everything correctly.

Another option to consider - your parents could potentially pay your mortgage lender directly for certain qualified expenses. There's an educational and medical expense exemption to the gift tax if payments are made directly to the institution. I know this doesn't apply to the full house payment, but if part of your financial situation involves medical bills or education loans, that portion could potentially be handled separately with no gift tax implications.

Everyone's making this way more complicated than it needs to be. The easiest solution is just to have your parents gift you $17K each per year (that's the annual gift tax exclusion for 2024) and you'll avoid the gift tax issue entirely. Yes it'll take a few years to get the full amount but it's the cleanest approach.

One important detail that hasn't been fully addressed - you mentioned your parents aren't US residents, but are they US citizens? This makes a huge difference in how the gift tax rules apply. If your parents are US citizens living abroad, they're still subject to US gift tax rules and get the full $13.61 million lifetime exemption (for 2024). They could gift you the entire $135K without any gift tax, though they'd need to file Form 709. If they're non-US citizens AND non-residents, then the advice about the $60K lifetime exemption and transferring to foreign accounts first is correct. But I'd strongly recommend getting professional tax advice before moving that much money around, especially since the IRS can be pretty strict about transactions that look like they're designed to avoid gift tax rules. Also, don't forget that even if no gift tax is owed, your parents may still need to file gift tax returns depending on the amounts and structure of the transfers.

This is a complex situation that really depends on your parents' exact tax status. From what you've described, if your parents are truly non-US residents and non-US citizens, the strategy of moving the money to a foreign bank account first before gifting is generally sound. However, I'd be very careful about the execution. The IRS has specific rules about transactions designed to avoid gift tax, so you'll want to ensure this is done properly with adequate documentation. The transfer to the foreign account should be a genuine change in the situs of the property, not just a temporary move to circumvent tax rules. A few additional considerations: - Make sure the foreign bank account is in your parents' names and they have legitimate reasons for maintaining foreign accounts - Document everything thoroughly - bank statements, transfer records, gift letters - Consider whether your parents have any US tax filing obligations that might complicate this Given the substantial amount involved ($135K), I'd strongly recommend consulting with a tax professional who specializes in international gift tax issues. The potential penalties for getting this wrong could be significant, and a professional can review your specific facts to ensure you're following the most appropriate strategy. The good news is there are legitimate ways to handle this - you just want to make sure you do it right the first time.

I've been following this thread closely since I went through almost the exact same situation last year. My parents are non-US citizens living in Japan and wanted to help me with a house purchase here in the US. After consulting with an international tax attorney (which I highly recommend given the amounts involved), we learned that the key is ensuring your parents truly meet the definition of "non-US persons" for gift tax purposes. This means they can't have been US tax residents at any point recently, never held green cards, and have no substantial US tax filing history. We ended up using the foreign account transfer strategy that several people mentioned. My parents moved their money from their US account to their Japanese bank, waited about 6 weeks (though as mentioned earlier, there's no required waiting period), and then gifted it to me from there. The total process took about 2 months but saved us potentially tens of thousands in gift taxes. One thing I wish someone had told me earlier - make sure to get a gift letter from your parents clearly stating the money is a gift and not a loan. Your mortgage lender will likely require this documentation anyway, and it helps establish the proper characterization of the transfer for tax purposes. Also, keep detailed records of the entire process - screenshots of account balances, wire transfer confirmations, and bank statements showing the money's movement. The IRS rarely audits gift transactions, but if they do, having a complete paper trail makes everything much smoother.