Question about Tax & Savings

[Shewillbemine]

My dad lives in a different country and is sending me a sizeable amount of money, electronic transfers through my bank.

I keep this money in a savings account. Will I need to pay taxes on this money? I realize sometimes there's a maximum, like $10,000 as a gift or something.

Any help would be appreciated, thanks.

[disneysteve]

Gift recipients aren't subject to taxes.

The Gift Tax that you often hear about applies to the giver. Since he is not in the US, I have no idea if he will be subject to any taxes. That will depend on the laws in his country.

[bjl584]

A wire transfer of $10,000 may enact the Patriot Act. You may want to have him send you two or three seperate transactions in smaller amounts just to avoid the hassle.

[disneysteve]

Originally Posted by bjl584

A wire transfer of $10,000 may enact the Patriot Act. You may want to have him send you two or three seperate transactions in smaller amounts just to avoid the hassle.

Actually, that would most likely still trigger the rules if they're paying attention. Anyone getting large amounts of cash deposits, even if none are over the 10K limit, will eventually draw attention.

[Shewillbemine]

Thanks for the replies. He has been sending them in $5000 increments and it's good to know that I, as the recipient, aren't tax liable.

Follow up question: I know that one of my savings accounts (ING Direct to be specific), sends my yearly statements to the IRS. If the money I keep in that savings account is taken directly from my earnings, does the IRS get to tax the money I save in there? Or is it merely for reporting purposes? Bear in mind that the money I put into this savings account is basically from my already-taxed salary.

Thanks again.

[jpg7n16]

Originally Posted by Shewillbemine

Follow up question: I know that one of my savings accounts (ING Direct to be specific), sends my yearly statements to the IRS. If the money I keep in that savings account is taken directly from my earnings, does the IRS get to tax the money I save in there? Or is it merely for reporting purposes? Bear in mind that the money I put into this savings account is basically from my already-taxed salary.

You'll be glad to know that the IRS does not tax you on balances. It takes on income. So no - if you put the money in an ING account, it will not be reported to the IRS (because that's a balance, not income). However, as we all assume you'll be earning interest on that money - any INTEREST you earn will be reportable to the IRS as income.

Or the 2nd way to read your question is, if you take the deposit to that account directly from your income is it still taxable? The answer to that one is yes - your income is all taxable, regardless of what you do with it - unless you put it into a tax deductible account (401k, traditional IRA, etc.). ING savings accounts are not deductible.

[Shewillbemine]

Originally Posted by jpg7n16

You'll be glad to know that the IRS does not tax you on balances. It takes on income. So no - if you put the money in an ING account, it will not be reported to the IRS (because that's a balance, not income). However, as we all assume you'll be earning interest on that money - any INTEREST you earn will be reportable to the IRS as income.

Or the 2nd way to read your question is, if you take the deposit to that account directly from your income is it still taxable? The answer to that one is yes - your income is all taxable, regardless of what you do with it - unless you put it into a tax deductible account (401k, traditional IRA, etc.). ING savings accounts are not deductible.

Thank you!