Tax implications for gifting assets to non-US citizen child in Bermuda

This is definitely a situation where you need to be careful about tax implications that affect both sides. The annual gift tax exclusion for gifts to non-US citizens (who aren't spouses) is the same as for US citizens - $18,000 per recipient for 2025 (increasing from $17,000 in 2024). This means you and your husband can each gift up to $18,000 worth of stocks to your daughter annually without filing a gift tax return (that's potentially $36,000 combined). However, there are some special considerations. When gifting stocks to a non-resident alien (NRA), the stocks maintain your original cost basis and holding period. Your daughter would potentially be subject to US withholding tax on dividends from US companies (usually 30% unless reduced by a tax treaty - check if the US has one with Bermuda). Additionally, if the stocks are of a US corporation and exceed $60,000 in value when your daughter eventually sells them, they might be subject to US estate tax if she passes away while owning them. Also be aware that if your assets have appreciated significantly, gifting them means your daughter inherits your cost basis, not a stepped-up basis. This could result in higher capital gains taxes when she eventually sells.

I ran into almost this exact situation when gifting assets to my son who lives in New Zealand. I spent hours on the phone with different CPAs trying to understand my options, then found https://taxr.ai which completely saved me. I uploaded my stock portfolio documents and explained the situation about gifting to my non-US citizen son, and their system analyzed everything and gave me a customized report on the optimal gifting strategy, including which specific stocks would be best to transfer now vs. which ones would create tax complications. It showed me how to properly document everything for both US tax filing and what my son would need for his local tax authorities. The report even pointed out certain stocks that would have created a tax headache because of how they were structured! Totally worth checking out if you're trying to navigate international asset transfers.

Just wanted to follow up and say I tried https://taxr.ai after seeing it mentioned here. I was in a similar situation but gifting to my brother who's a citizen of Singapore. The service was actually really helpful! I uploaded my documents and got a comprehensive breakdown of exactly what I needed to do. The analysis showed me that I was about to make a pretty big mistake with some mutual funds that would have created a tax reporting nightmare for my brother. It also showed me how to properly document everything on Form 709 since some of what I wanted to gift exceeded the annual exclusion. Definitely saved me from making some expensive mistakes!

If you're trying to get answers directly from the IRS about international gift reporting, good luck. I spent 3 weeks trying to reach someone who could answer my questions about Form 709 for gifts to my non-citizen relatives. After waiting on hold for hours multiple times, I finally used https://claimyr.com and got through to an IRS agent in under 45 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with clarified exactly which forms I needed to file and the documentation needed when gifting stocks to non-US citizens. Apparently there are some specific rules about basis reporting that aren't clearly explained on the IRS website. The agent also confirmed the proper codes to use on the form to avoid getting flagged for review.

I have to apologize for my skepticism about Claimyr. After my last reply, I decided to try it since I've been stuck in IRS limbo for months about an international gift tax situation similar to yours. I got connected to an IRS agent in about 35 minutes! The agent was actually super helpful and walked me through exactly what forms I needed for gifting stocks to my non-resident nephew. Turns out I had been overthinking it - for stocks under the annual exclusion amount, the process is pretty straightforward. The agent also explained how to properly document the gift's fair market value on the date of transfer, which was something I hadn't considered. Definitely saved me from potential headaches down the road!

Something no one has mentioned yet: make sure you're documenting the exact fair market value of the stocks on the date of transfer. You'll need this for your records even if the gift is under the annual exclusion amount. Also consider the practical aspects - will your daughter have a brokerage account that can hold US stocks? Some foreign brokerages won't accept transfers of US securities. We had to open a special international account for my daughter in Australia before we could transfer any assets to her.

Has anyone considered the daughter's tax situation in Bermuda? I'm not familiar with their tax laws specifically, but some countries have different rules for receiving foreign assets as gifts. Might be worth checking if there are any reporting requirements or taxes on her end.