How do I handle a gift from siblings living in a foreign country for US taxes?

Wait I'm confused. I thought there was a $17k annual gift limit before the donor has to file paperwork? Does that not apply if the money is coming from non-US citizens?

You're thinking of the annual gift tax exclusion, which is actually $18,000 for 2024 (it was $17,000 for 2023). You're right that this exists, but the rules apply differently for non-resident aliens (people who aren't US citizens or residents). For gifts of non-US situated property (like cash transfers from abroad), non-resident aliens generally aren't subject to US gift tax at all, regardless of the amount. The US gift tax system primarily focuses on US citizens, US residents, and transfers of US-situated property by foreign persons.

How accurate is this tool? I'm getting money from my grandparents in Poland soon and I'm worried about messing up my taxes. Does it just give general advice or specific instructions for your situation?

I'm a little skeptical of these tax tools. Did it explain WHY you didn't owe taxes? I've heard horror stories of people getting bad tax advice online then getting audited.

The tool gives you specific guidance based on your personal details. It's not just generic advice - it looked at my specific circumstances including the amount, relationship to my uncle, and the fact that the money came from overseas. It even generated a customized report I could save for my records. Yes, it absolutely explained the reasoning behind everything! It referenced specific IRS regulations and explained that gifts are not considered taxable income for the recipient under US tax code. For international gifts, it detailed why my uncle (as a non-resident alien transferring non-US situated property) wasn't subject to US gift tax, but why I still needed to report it due to the amount exceeding $100,000. It was really thorough.

Wait, this sounds too good to be true. How does this even work? The IRS never answers their phones. Is this some kind of scam or do they have some special access?

I don't believe this for a second. I've tried calling the IRS for 3 MONTHS straight about my refund and never got through. No way some random service can magically get you to a real person.

It's not some secret backdoor or anything sketchy. The service basically calls the IRS for you and navigates through all the phone menus and hold times using technology. When they finally reach a human agent, they connect that call to you. It's like having someone wait on hold for you. I was super skeptical too! But I was desperate after weeks of trying on my own. They use an automated system that keeps dialing and waiting so you don't have to. It took about 18 minutes for my call, but that was WAY better than the hours I wasted trying myself. When I finally spoke to the IRS agent, they were just a regular IRS employee - Claimyr just handled the painful waiting part.

FBAR is for when YOU have foreign financial accounts that total over $10k. If your siblings just wire money directly to your US bank account, that's not an FBAR issue since you don't have a foreign account yourself.

Thanks for the clarification! That makes sense - I was confusing the FBAR requirements with the foreign gift reporting. So basically if the money just comes straight to my US account, no FBAR needed, but potentially Form 3520 if it's over $100k from foreign sources.

That's a really good point I hadn't considered. I'll definitely tell my sister and brother to check the Japanese gift tax rules before they send the money. I don't want them to be surprised with an unexpected tax bill on their end while I'm not paying anything here. Do you know if they need to file anything with the US government even though they're not US citizens? Or is their tax obligation strictly with Japan?

From what I understand, they generally wouldn't need to file anything with the US government for a cash gift if they're not US citizens/residents and they're transferring non-US property (like money from a Japanese bank account). Their obligations would be primarily with the Japanese tax authorities. Japan does have pretty significant gift taxes that vary based on the relationship and amount. I think for siblings the exemption amount is fairly small there compared to the US. They should definitely consult with a Japanese tax professional because their system works quite differently from ours!

Great questions! From my understanding, the Form 3520 reporting threshold is calculated on an annual basis, so if you receive $50k this year and $50k next year, each year would be under the $100k threshold and you wouldn't need to file Form 3520 for either year. The IRS looks at it year by year, not as a cumulative total across multiple years. For currency conversion, you're absolutely right - you'd use the exchange rate on the date the funds are received or deposited into your US account. The IRS typically accepts using the Treasury's published exchange rates for that date, though you could also use other reasonable sources like major bank rates. Just make sure to document which rate you used and keep records in case you ever need to show your calculations. One other thing to consider - even though the reporting thresholds are annual, it might be worth keeping detailed records of all international gifts regardless of amount. It helps establish a clear paper trail if questions ever come up later, especially since you're dealing with substantial amounts across multiple years.