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Each situation is different, this article was written for informational purposes only and the opinions mentioned here do not constitute financial advice.
Gift tax rules for US resident giving to or receiving from a foreign person
This article will cover the primary scenarios related to gift tax/estate rules for US residents (meaning some visa-holders, permanent residents, or US citizens). How much can you give to, or receive from, someone here or abroad with or without filing documentation with the IRS? This article is for informational purposes only and doesn’t constitute financial advice. Please consult a professional as each situation is unique.
Scenario 1: US Resident gift to a US Resident
As a US resident, you can give $15,000 per year to any other US residents without having to do any paperwork. If you want to give more than $15,000, you can give up to $11.58 million without paying any taxes, but you will have to fill out form 709.
$11.58 million is the lifetime exemption. The amount you give in addition to the $15,000-per-year will be subtracted from the $11.58 million (2020).
Scenario 2: US Resident gift to a French Resident
US residents’ gift rules follow the rules from scenario 1. On the French side, a gift from a non-resident is taxable. It will be taxed in France depending on the relationship with the recipient. There will be a deduction from the value of the gift. This deduction can be applied every 15 years.
- 100,000 euros per child from each parent
- 31,865 euros per grand-child from each grandparent
- 5,310 euros per great grand-child from each great-grandparent
There will be 5%-45% tax on the amount above this threshold.
- 15,932 euros to a sibling then 35% (below 24,430 Euros) and 45% (above 24,430 Euros)
- 7,967 euros to a niece/nephew (55% above this threshold).
The French resident has one month to report the transaction and pay the fees via French form 2734; if more than one month has passed, they must use French form 2735.
If the gift is a real estate gift, you must go through a “notaire” in France to record it.
Scenario 3: French Resident gift to a US Resident
The US resident has to report the gift through form 3520 if the gift is more than $100,000 but they won’t pay taxes on it.
The French resident has to report the gift according to scenario 2 above.
How much can you give to a French resident or receive from a French resident without paying taxes?
On top of the 100,000 Euros, you can sometimes give 31 865 Euros every 15 years to your child. It’s called a “don familial” – family gift.
It means that parents can give a total of 263,730 Euros every 15 years without paying any taxes.
Another way to give money or another gift to your child is a “don d’usage”. The amount has to be small relative to the gift giver’s net worth. According to the French law, it has to be less than 2.5% of the giver income and 2% of his net-worth and must be given for a specific event (birthday, Christmas etc.). It doesn’t have to be recorded.
There is also an exception for a specific type of account in France called PEL where you can put up to 61,200 Euros for your child under age 18 without it being considered a gift.
Guillaume Decalf from Oui Financial – email@example.com – After a 15-year career in Tech, including nine years in the United-States, Guillaume switched careers by obtaining his Financial Advisor’s License and starting Oui Financial, a firm specialized in financial planning and investments for French people and French-american families in the United States. He is based in San Francisco, California but serves clients throughout the US.
MerciSF is not responsible for the advice provided in this article.