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Foreign tax exclusion

Question: it is our understanding that a US person who receives up to $ 100,000 from a non-resident relative during a given tax year does not need to file form 3520 (and that this event does not attract taxes). Now, what happens if a US couple receives $ 100.000 each, from, let's say, the same non-US & non-resident relative? Does the foreign tax reporting exclusion still applies to the husband and the wife separately or is it considered to be a "joint" gift of 200.000 ? Does a joint tax return affect the above mentioned exclusion(s)?

Thanks for your comments.

Worley.

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worley
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The $100,000 reporting requirement is per individual. Thus, two gifts from a nonresident noncitizen to two U.S. individuals of $99,000 would not need to be reported on Form 3520. However, because the penalties can be up to 25% of the gift received, in this circumstance, I would recommend that Form 3520 be filed in any case. There is no tax due whether you file the form or not. It is simply a disclosure form and very easy to complete (Part IV). If you don't file the form and the IRS learns that you recently came into a lot of cash, they may have some questions. If you have already filed Form 3520, the IRS wouldn't even need to ask where you got the cash.

Andrew Mitchel, Esq. Essex, Connecticut

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