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BNBJul19 · Jul 19, 2012, 07:33 AM

My father who is an Indian citizen would like to wire transfer approximately $100,000 to my bank account in the US (I am a US citizen) for the college expenses for my son (his grandson). Please let me know if this would be legal, and what regulatory and tax rules if any would apply to this transaction.

Thanks
B N Bose

AtlantaTaxExpert · Jul 19, 2012, 08:10 AM

Mr. Bose:

There are NO transfer taxes in the United States, and the transfers is NOT considered to be income for taxes purposes. Hence, there are no tax implications.

You MAY need to submit Form 3520 to report the transfer, but that is an INFORMATION only submission, with NO taxes due.

DaB123 · Jul 19, 2012, 11:34 AM

And if the transfer is less than 100K, there is no form 3520 filing requirement.

AtlantaTaxExpert · Jul 19, 2012, 11:44 AM

Yes, that IS correct. If the transfers for the calendar year do NOT exceed $100K, then Form 3520 is NOT required.

BNBJul19 · Jul 23, 2012, 06:08 AM

Thanks. Please advise what paperwork I should obtain from my dad supporting the transaction to be ready to answer any questions that IRS may have when I file returns in Apr 2013. (I have a question out to H&RBlock, still waiting to hear back)

AtlantaTaxExpert · Jul 23, 2012, 07:09 AM

You probably have all the needed information, as to from where the money came and the various account numbers involved.

BNBJul19 · Jul 23, 2012, 08:00 AM

Ok, I was wondering if my dad should write a letter stating that this money is for his grandson's college education.

AtlantaTaxExpert · Jul 23, 2012, 08:25 AM

If you want to have that letter in your file should the IRS ask, that may not be a bad idea. But do NOT send it in with the Form 3520.

BNBJul19 · Jul 23, 2012, 08:30 AM

Originally Posted by AtlantaTaxExpert

If you want to have that letter in your file should the IRS ask, that may not be a bad idea. But do NOT send it in with the Form 3520.

But I wasn't even going to submit a 3520 since the amount won't be > 100,000, is that OK?

AtlantaTaxExpert · Jul 23, 2012, 08:38 AM

Yes, that is fine.

Note that if your father transfers the money to your bank account in India, then you transfer the money to your U.S. account, you will have to submit the FBAR because your Indian accounts exceeded $10,000, even if it was for only a day or so.

BNBJul19 · Jul 23, 2012, 09:11 AM

Originally Posted by AtlantaTaxExpert

Yes, that is fine.

Note that if your father transfers the money to your bank account in India, then you transfer the money to your U.S. account, you will have to submit the FBAR because your Indian accounts exceeded $10,000, even if it was for only a day or so.

I do not have any bank accounts in India, he is going to transfer directly from his account to my account in the US.

AtlantaTaxExpert · Jul 23, 2012, 09:34 AM

Okay; just covering all the bases.

BNBJul19 · Jul 23, 2012, 10:09 AM

Thank you for your help.

AtlantaTaxExpert · Jul 23, 2012, 10:20 AM

Glad to help!