Sending and Receiving Money and Gifts Across Borders

Money moves both ways for most families split across countries. You may send money home every month to support parents, pay a loan or build savings, and you may receive a large sum from family for a down payment or an inheritance. Each direction has a cost that is easy to miss, the exchange-rate markup, and a reporting rule that is easy to miss, Form 3520 for large gifts from abroad. This chapter covers both, along with the gift tax rules for what you send, and a new federal tax on some transfers that began in 2026.

Receiving gifts and inheritances from abroad

A gift or inheritance you receive is generally not income in the United States; the instructions for Form 3520 do not treat it as taxable to the person who receives it. Reporting is another matter. A US person, which includes a resident alien, must file Form 3520 to report:

• gifts or bequests totalling more than $100,000 in the year from a nonresident alien individual or a foreign estate. Gifts from people related to each other are added together, so gifts from both parents count as one total; and
• gifts from foreign corporations or foreign partnerships above a much lower amount, $20,573 for 2026, which is adjusted for inflation each year.

Form 3520 is due on the same date as your income tax return, generally April 15, and it is extended when your return is extended. It is filed separately from the return. The penalty for not reporting a foreign gift is 5% of the gift for each month the failure continues, up to 25% of the gift. For a large gift toward a house, that can be a serious sum for a form that carries no tax.

A few points are worth knowing in advance. The threshold is per year, across all related givers, so a large gift split between two parents does not avoid it. A transfer is a gift only if nothing is expected back; money that must be repaid is a loan, with different consequences. And once the money arrives, its earnings are yours and taxable, and the account it lands in, if it stays abroad, may count for the FBAR and Form 8938 (chapter 2).

The rules in the other country can matter as much. Many countries limit or tax what residents may send abroad, and the sending bank applies those rules. Ask the bank on the sending side what it needs before the transfer, not after.

Sending gifts home: the US gift tax

When you give money to family, the gift tax question is the giver's. For US gift and estate tax, residence is decided by domicile, where you live with no definite plan to leave, not by the income tax tests that make you a resident alien. A visa holder who intends to leave may not be domiciled here even while paying US income tax as a resident; someone who plans to stay usually is. If you are unsure which side you fall on, that uncertainty is itself a reason to ask a professional before a large gift.

For a giver who is domiciled in the United States, each recipient can receive up to $19,000 in 2026 without any gift tax return. Above that, the giver files Form 709, but tax is due only after a very large lifetime amount has been used up, so for most families the result is a form, not a bill. Gifts to a spouse who is not a US citizen have their own, higher annual exclusion, $194,000 for 2026. A nonresident who is not domiciled here is subject to US gift tax mainly on gifts of real and tangible property located in the United States, not on gifts of money held abroad, according to the IRS's questions and answers on the subject.

Regular support of parents, such as paying their living costs, is still a gift for these rules, though it is rarely large enough to matter. Keep a simple yearly record of what you sent to each person.

What a transfer really costs

The price of an international transfer has two parts: the fee you see and the exchange rate you are given. The second is usually larger. Most providers convert at a rate a little worse than the market rate and keep the difference. A transfer advertised as free can cost more than one with a fee if its rate is worse.

US law requires a remittance transfer provider to show you, before you pay, the amount transferred, its fees and any taxes it collects, the total, the exchange rate it will use, certain fees charged by others, and the amount the recipient will receive. Under the Consumer Financial Protection Bureau's rules you can cancel a transfer within 30 minutes of paying, with a full refund, in most cases. That disclosure lets you compare providers on the only number that matters: how much arrives.

Small differences add up when you send money every month.

A household whose monthly transfers lose $40 to fees and the rate gives up $480 a year and $4,800 over 10 years. At $10 a month, the cost is $120 a year and $1,200 over the same period. To find your own number, compare the amount the recipient would receive with what the same dollars would buy at the market rate on the same day.

The new 1% tax on cash-funded transfers

Since January 1, 2026, a federal excise tax of 1% applies to certain remittance transfers. IRS Notice 2025-55 explains that it applies only when the sender pays the provider with cash, a money order, a cashier's check or a similar physical instrument. The sender pays it and the provider collects it. A transfer you fund from a bank account or with a debit or credit card is outside the tax. The rules are new: Treasury and the IRS issued proposed regulations in April 2026, including an anti-abuse rule for arrangements whose main purpose is avoiding the tax. Check the provider's disclosure, which must show any tax it collects.