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Gifts of money to a non-resident-non-citizen?
Old 02-20-2009, 01:43 AM   #1
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Gifts of money to a non-resident-non-citizen?

We have family in another country to whom we're considering giving a substantial sum of money (over $10K). Our family are not US citizens and are not US residents and so do not have US taxpayer ID numbers.

My thought at this time is to open an account at Citibank or HSBC and put one of the non-US family members on it as a co-owner, then deposit the money in the account. This would allow them to withdraw the money from the branch in their country and would reduce transfer fees, etc. It would be a USD-denominated account.

Any ideas, pitfalls, or suggestions on this method? I realize we're in a post-911 world and transfers of money abroad are suspicious. We want to do things legally. We'd file a gift tax return (I assume we'd need to) to make sure the paperwork was good on our end.

Ideas? Anyone done something similar?

Thanks!
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Old 02-20-2009, 10:10 AM   #2
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Seems like you are on the right track. Maybe you can find some answers here: Foreign Currency: Send or spend money internationally ...
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Old 02-20-2009, 12:19 PM   #3
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OAG, thank you for the link. While the country our family lives in doesn't show up on the standard lists, I know Citibank has a branch there. So I'll contact Citi and see what the process is and the fees are, if any.

I'll assume that the bank can also give us guidance on the legal issues, if any, of transferring money out of country.
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Old 02-20-2009, 12:24 PM   #4
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Depending on how much you are going to give, each member of your family can give (in 2009) $13K to any individual without triggering a gift tax. If there are two of you and two of them, that would be up to $52K that could be given free and clear. Seems to me all you have to do is send the check. It might trigger a notification when deposited, but as long as your family members aren't a terrorist front it shouldn't be a big deal.

I would hesitate to do the bank account thing. It seems overly complicated Nd might create some international tax issues for the overseas folks. Just do it straight, and if anybody ever questions it tell them the truth. I doubt there would be any blowback.
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Old 02-20-2009, 07:43 PM   #5
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Harley, can someone in another country just deposit a check written off my personal checking account, in US dollars, or would it need to be a cashier's check? This is probably an utterly naive question, but it's not something I've dealt with before.
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Old 02-21-2009, 09:32 PM   #6
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I don't actually know the answer to this, for sure. But I think they can. I'm sure there will be costs (exchange rate, maybe a service charge). But I don't see the difference from doing it via check versus an electronic transfer, and those happen every day. As a matter of fact, I've noticed a lot of the companies I send a check to saying that sending them the check is giving them permission to do a one time electronic transfer.

It would probably be easier to do a transfer, though.I would ask at the bank. They should be able to tell you. Or one of the many multinational forum members might be able to help.
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Old 02-21-2009, 09:42 PM   #7
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In the US you can give that amount without it being subject to gift tax--if it is received in another country are there limits there as to how much the recipient can receive at one time without it being taxed? Just something else to consider.

I always heard you should make deposits in US banks in amounts less than $10,000--I don't know why or if that's an urban legend, but for some reason that sticks in my head.

I agree with Harley's suggestion to ask someone at your bank how to handle this.
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Old 02-22-2009, 06:51 AM   #8
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No that is the level, above with, the bank reports you to (actually I think you have to fill out the form and give it to the bank) the Secret Service. What they do with it is up to them. Busting the deposits up to stay below the $10K limit is also more of a no no.
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Old 02-22-2009, 12:08 PM   #9
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Quote:
Originally Posted by OAG View Post
No that is the level, above with, the bank reports you to (actually I think you have to fill out the form and give it to the bank) the Secret Service. What they do with it is up to them. Busting the deposits up to stay below the $10K limit is also more of a no no.
You don't have to fill anything out, the bank does. And they do it dozens or hundreds of times/day. It's no big deal, just a way for them to track large transfers looking for dealers or terrorists. You'd need to have a regular history of it before anybody would notice. It's more a tool they use to tie things together after someone is busted, so don't worry about that. As OAG says, breaking a transaction up to avoid notice is actually a crime, whereas the large transaction thing isn't.

Every time anybody pays closing costs over $10K or something like that the form gets filed. Money gifts like Urchina's are also a standard big number transaction that happen regularly, especially around Christmas. I'm a big conspiracy nut and anti-Big Brother activist, and even I'm not worried about this one. Heck, if they don't update it for inflation, in a few years everybody's paycheck will kick off the process.
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Old 02-22-2009, 12:30 PM   #10
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Well for those interested here is the form that is used (Department of the Treasury Finance Form 104): http://www.fincen.gov/forms/files/fin104_ctr.pdf
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Old 02-22-2009, 12:41 PM   #11
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Quote:
Originally Posted by Urchina View Post
Harley, can someone in another country just deposit a check written off my personal checking account, in US dollars, or would it need to be a cashier's check? This is probably an utterly naive question, but it's not something I've dealt with before.
I'd look into an international wire transfer. I've done this a many times without any major problems. The key is to look at the fees - usually you have to pay to send and they have to pay to receive up to a maximum amount. Sending from here is fairly inexpensive: $15 to $25. On the receiving end, they charge us 1% up to a max of ~50USD (varies based on exchange rate).

Another potential pitfall is the exchange rate if you're transferring USD into an account held in the local currency. I've done this and although the exchange rate wasn't the best, it also wasn't the worse.

I know when I was investigating transferring funds, I found clearance houses where you could wire the money to get a better rate and then they would forward it to a local bank account. I never tried this, so I don't know how well it does or doesn't work (didn't seem worth the hassle in my case).

Another option is that in some countries, you can have a bank account in USD (very common in the country we send to). If you are dealing with a large sum and want some control over when the money is converted to local currency, this might be a good option. If your relatives can open this type of account, then you can issue a wire transfer in USDs and they can deal with the currency conversion as they see fit.

In our case, we never filed a gift tax return, but we were comfortably within the allowed gift amount per tax year.

Btw, if you have the currency converted during the wire transfer, odds are you want the funds converted at the foreign bank and not here. You usually have the option to convert the funds in the US bank or the foreign bank, but in all cases I've seen, the exchange rate they quote you is obscene for a conversion at the US bank.

If you have more questions, feel free to PM me.
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