For families with assets spanning the United States and abroad, estate and gift tax rules contain critical traps—especially when transferring funds from foreign parents or holding U.S. stocks and real estate as a non-citizen.
1. Receiving Foreign Gifts or Inheritances (IRS Form 3520)
Gifts or inheritances received by a U.S. tax resident from a non-resident alien (such as parents in India) are generally not taxable as income. However, if the aggregate amount exceeds $100,000 during a calendar year, you must file informational Form 3520 with the IRS. Failure to file Form 3520 carries a penalty of up to 25% of the gift amount.
2. Annual Gift Tax Exclusions & Spousal Transfers
When gifting assets, keep in mind that while gifts between U.S. citizen spouses are unlimited, transfers to a non-citizen spouse are subject to an annual exclusion cap rather than the unlimited marital deduction.