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US does not have a foreign gift tax. But I had a question on whether someone needs to report it or not. Let's assume I receive a gift from a foreign family member and it is less than 100k$. So as far as I know since this is less than the threshold mentioned, it does not require me to report it to IRS. Also since the donor is also foreigner obviously they don't have to file the form 709.

Now what happens if within the same tax year the family member that gave the gift travels to US and applies to green card via adjustment of status. Does this put some form of burden on the donor or recipient of the gift to report it somewhere? (Note that gift was made before the travel of the donor to US)

Does the answer change if we assume that the total gift value of the donor is more than 100k$ but it is made to different people such that for each it does not surpass 100k$.

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  • I get that this is an educational site and that you haven't framed this as a request for advice, but on the off chance that you're asking "for a friend," I'd strongly recommend against relying on random people on the Internet to explain immigration law or tax law, as these are especially complicated areas of the law where getting a wrong answer can have extraordinarily severe consequences.
    – bdb484
    Jan 30, 2023 at 7:25
  • "US does not have a foreign gift tax." It isn't clear what you mean. Gifts by U.S. person to foreign persons are subject to the gift tax if no other exception applies. Gifts by foreign persons to U.S. persons are not subject to the gift tax. This makes sense when you realize that the entire gift tax is really designed to close a loophole in the estate tax for gifts made during life. A gift made by a foreign person to a U.S. person doesn't evade the U.S. estate tax, so it isn't a concern. $100k is the exemption from the gift tax for a gift from a U.S. citizen to a non-U.S. citizen spouse.
    – ohwilleke
    Jan 30, 2023 at 17:39

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Also since the donor is also foreigner obviously they don't have to file the form 709.

The IRS instructions for form 709 has a long section that starts:

In general. If you are a citizen or resident of the United States, you must file a gift tax return (whether or not any tax is ultimately due) in the following situations.

After that it says

Who does not need to file. If you meet all of the following requirements, you are not required to file Form 709.

  • You made no gifts during the year to your spouse.

  • You did not give more than $16,000 to any one donee.

  • All the gifts you made were of present interests.

There is no statement excluding "foreigners". You may be correct that a "foreigner" does not have to file form 790, but the US tax code is not trivial, and does call for focused individualized legal analysis. Your main interest here seems to be the interest of the non-US person, so I assume you know about your obligation to file IRS Form 3520.

A nonresident alien may be obligated to file a tax return, thus any general idea that "foreigners" don't have US tax obligations is incorrect. A person who does not pass the green card test may still pass the substantial presence test. In addition, there are tax treaties between the US and some other countries, whereby a person from Sudan isn't treated the same as a person from Norway.

The law regarding income tax, including gifts, is generally stated in terms of the tax year, and not "the moment of the event". If a person with no legal connection to the US makes a gift of $20,000 to a US person, and within that year becomes a US person (obtains a green card), that US resident will have made a gift within the tax year in excess of the tax-free limit, therefore must file form 709. They or their tax specialist would consult the instructions on form 709, reading whether there might be an exception for transfers not subject to tax (esp. educational or medical exclusion) or certain gifts to spouse.

Which is a long-winded way of saying "ask your (tax) attorney".

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