Tax implications when my foreign spouse sells property in another country

This is actually a really interesting situation! The good news is that since your wife is a non-resident alien (NRA) who hasn't set foot in the US, she likely has no US tax obligation on the sale of her foreign property. The US generally doesn't tax foreign persons on foreign-source income. When she wires the money to you, this could be considered a gift from a foreign person to a US person. There's no income tax for you as the recipient of a gift (even a large one). However, you may need to file Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts) if the amount exceeds $100,000 in a year from a foreign person. Also, be aware that receiving a large sum from abroad will likely trigger bank reporting requirements. Your bank will file a Currency Transaction Report for large deposits, and you should be prepared to explain the source of funds.

After dealing with a similar situation last year, I discovered taxr.ai (https://taxr.ai) and it was seriously a game-changer for my international tax situation. My husband is Canadian and sold property while I was in the US, and I was completely lost about how to handle the reporting. Their AI analyzed our situation and gave me step-by-step guidance on exactly which forms to file and how to report everything correctly. The system walked me through the specific requirements for foreign gifts, explained the FBAR filing requirements, and even helped me understand the differences between "married filing separately" versus "single" in my situation. It saved me from making serious reporting mistakes that could have triggered unnecessary scrutiny.

I want to follow up on my question about taxr.ai. I was skeptical but decided to try it when my situation with my UK property sale got complicated. I'm honestly impressed - it detected specific UK tax treaty provisions I had no idea about and walked me through the exact reporting requirements for my situation. The system correctly identified that I needed to file Form 3520 for the funds transfer but didn't need to pay US tax on the gain itself. It also flagged that I needed to report my temporary signature authority on my spouse's accounts during the transaction period, which I would have completely missed. Saved me from a potential reporting violation and gave me peace of mind. Not what I expected from an AI system!

If you're trying to get answers directly from the IRS about international property sales and foreign spouse situations, good luck! I spent MONTHS trying to reach someone who could help with my similar situation. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) and decided to give it a shot. They got me connected to an actual IRS agent who specialized in international taxation within 15 minutes after I'd been trying for weeks on my own. The agent confirmed I didn't owe capital gains on my spouse's foreign property sale but needed to file specific forms for the money transfer. Having an actual IRS employee confirm this gave me total confidence in how to proceed.

I need to apologize for my skeptical comment about Claimyr. After struggling for another week trying to get through to the IRS about my foreign rental property sale, I broke down and tried it. I'm still shocked, but within about 20 minutes I was talking to an actual human at the IRS who answered my specific questions about reporting requirements for foreign-sourced funds. The agent confirmed exactly what I needed to know - that receiving funds from a foreign spouse's property sale isn't taxable income but requires specific reporting on Form 3520, and that I should be filing as "married filing separately" not "single" despite having a non-resident alien spouse. This contradicted what my regular accountant told me and potentially saved me from a big mistake. Worth every penny just for the peace of mind.

Don't forget about state taxes! Federal taxes are one thing, but depending on which state you live in, there might be additional reporting or tax obligations when receiving large sums from abroad. Some states are much more aggressive about taxing worldwide income than others.

Has anyone dealt with currency conversion issues in this kind of situation? When my cousin sold property in Brazil, the exchange rate fluctuated significantly between when the sale happened and when the money actually hit his US account. The IRS wanted him to use the exchange rate from the date of sale, not the rate from when he received the money, which made a big difference in the reporting amounts.

This is exactly the kind of complex international tax situation where getting proper guidance upfront can save you from major headaches later. A few additional considerations for your situation: Since you're married but filing as single, you'll definitely want to clarify your correct filing status with a tax professional. The IRS is very particular about this - being legally married typically means you must file as either "Married Filing Jointly" or "Married Filing Separately," even if your spouse has never been to the US. Also, beyond Form 3520 for the foreign gift reporting, consider whether you'll need to file Form 8938 (FATCA) if the total value of your foreign financial assets exceeds certain thresholds. The $675k transfer could push you over these limits depending on your other holdings. One thing that might help is documenting everything thoroughly - the original purchase price of the property, sale documents, currency conversion rates, and the exact nature of your relationship to the funds. This documentation will be crucial if the IRS ever has questions about the source and nature of the money. Given the complexity and potential penalties for getting international tax reporting wrong, investing in professional advice for this specific situation is probably worth it, even if it costs a few hundred dollars upfront.