International USA tax advice filter.
February 23, 2021 10:39 PM Subscribe
How to ’notarize’ a gift from UK parent to USA citizen (and an AUS citizen) for US tax purposes. USA citizen has power of attorney over UK parent’s account - does not want to expose the UK account to US tax liability or themselves to IRS problems. Tax advisor/accountant recommendation wanted.
Does anyone have a USA tax advisor or USA professional accountant they can recommend who is familiar with international tax law... Specifically USA FATCA Tax issues or who can give reasoned formal advice on the below. I'm happy to pay for a consultation on this
Here is the question I would ask them in case you happen to be that tax advisor or want to fwd it to them....
My mum sold her house last year for ~£450k She wants to give a gift of £50k each to my brother and I. She is a UK citizen, I’m a US citizen, my brother is an Australian citizen.
She’s shielding in a UK nursing home at the moment. I have power of attorney over her financial affairs and have been managing her accounts; she wants me to do the transfers.
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My current regular accountant will not give advice about this - he doesn't consider himself qualified, and hasn't offered a suggestion of someone who is.
Here is the CPA journal’s analysis on issues like this
Until now the only transfers between accounts or spending I’ve done on behalf of my mum have been to pay bills for her and to set up a trading account; it’s clear that with my current activity, the FBAR is all I need to do, and an audit would reveal the same.
I will be filing a FBAR this year with Financial Crimes Enforcement Network (FinCen) as required by law. I will not be filing an 8398 “beneficial ownership” form with the IRS describing an ownership interest in my mum’s accounts.
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What I want to make sure is that my mother's gifts - executed by me on her behalf - to me and my brother do not in the next tax year or future tax years
- propel me in the eyes of the IRS to having an ownership interest in the account
- cause problems in any audit that the IRS might do on us - including making the accounts subject to USA tax liability or the money from the gift being described as anything other than a parent to child gift
- cause other issues
Is there an affidavit, form letter or other process my mum can do that says “I’m instructing UK person to give this gift” with the legal implication that the bank account hasn’t suddenly become mine or cause the problems above.
Does anyone have a USA tax advisor or USA professional accountant they can recommend who is familiar with international tax law... Specifically USA FATCA Tax issues or who can give reasoned formal advice on the below. I'm happy to pay for a consultation on this
Here is the question I would ask them in case you happen to be that tax advisor or want to fwd it to them....
My mum sold her house last year for ~£450k She wants to give a gift of £50k each to my brother and I. She is a UK citizen, I’m a US citizen, my brother is an Australian citizen.
She’s shielding in a UK nursing home at the moment. I have power of attorney over her financial affairs and have been managing her accounts; she wants me to do the transfers.
---
My current regular accountant will not give advice about this - he doesn't consider himself qualified, and hasn't offered a suggestion of someone who is.
Here is the CPA journal’s analysis on issues like this
Until now the only transfers between accounts or spending I’ve done on behalf of my mum have been to pay bills for her and to set up a trading account; it’s clear that with my current activity, the FBAR is all I need to do, and an audit would reveal the same.
I will be filing a FBAR this year with Financial Crimes Enforcement Network (FinCen) as required by law. I will not be filing an 8398 “beneficial ownership” form with the IRS describing an ownership interest in my mum’s accounts.
---
What I want to make sure is that my mother's gifts - executed by me on her behalf - to me and my brother do not in the next tax year or future tax years
- propel me in the eyes of the IRS to having an ownership interest in the account
- cause problems in any audit that the IRS might do on us - including making the accounts subject to USA tax liability or the money from the gift being described as anything other than a parent to child gift
- cause other issues
Is there an affidavit, form letter or other process my mum can do that says “I’m instructing UK person to give this gift” with the legal implication that the bank account hasn’t suddenly become mine or cause the problems above.
Tax advice for complex situations is something that Ask doesn't do well, IME. It sounds to me like you have a correct understanding of your obligations and that your concerns about the IRS taking issue with what you're doing are not well founded but if you want a professional second opinion, you can try Hodgen Law. They are pricey but good.
posted by phoenixy at 1:23 AM on February 24, 2021 [2 favorites]
posted by phoenixy at 1:23 AM on February 24, 2021 [2 favorites]
A family member employs an American accountant resident in London that deals with these sorts of issues. She comes recommended.
posted by einekleine at 2:55 AM on February 24, 2021
posted by einekleine at 2:55 AM on February 24, 2021
Sorry, I know you asked for a tax advisor recommendation and I don’t have one. But I did, at one point, work with Americans living overseas who were doing things like buying property in the US or transferring assets, and if you know that what you want is “an affidavit, form letter, or other process...” you might want to look into medallion signature guarantees. Basically this is a special notarization for financial transfers (special in that the executing institution is assuming financial liability if fraud is committed) that affirms a signature is legitimate, that the person signing is the appropriate person to authorize a transfer, and that the person is legally capable (of sound mind, not being coerced, etc) to do so. Medallion signature guarantees are typically not available outside the US, but the UK is an exception.
And sorry again, but I do wonder if you might be conflating two issues here. One is the complication of being POA over a foreign account and the extra reporting requirements that brings. But the other is when and whether a gift transfer would make the IRS assumes that because you have signatory authority on an account you should be responsible for the taxes on that account, which seems unrelated to the overseas part. If that’s really your question, you might have a much larger pool of advisors to draw from or be able to frame your own research differently - you would focus on the POA part, rather than the overseas/FATCA red herring.
posted by exutima at 6:55 PM on February 25, 2021
And sorry again, but I do wonder if you might be conflating two issues here. One is the complication of being POA over a foreign account and the extra reporting requirements that brings. But the other is when and whether a gift transfer would make the IRS assumes that because you have signatory authority on an account you should be responsible for the taxes on that account, which seems unrelated to the overseas part. If that’s really your question, you might have a much larger pool of advisors to draw from or be able to frame your own research differently - you would focus on the POA part, rather than the overseas/FATCA red herring.
posted by exutima at 6:55 PM on February 25, 2021
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I believe gifts in excess of $10,000 are subject to "gift tax" just as any large sum given at one time would be no matter where it originated. If you make deposits into a US bank of a lump sum over $10,000 the bank is required to report it to the IRS. Since the transaction originates in UK it does not require documentation of its source but the beneficiary may be owing a small sum after its deposited. There are bank transactions like mutual funds, CDs, etc that can hold these funds for a period of time without tax liability. Talk to a bank and then contact HR Block. They are the tax professionals.
posted by The_imp_inimpossible at 12:34 AM on February 24, 2021