Do you have to pay taxes on gifts received from foreign nationals?

What you should know about reporting rules and gift taxes from foreign nationals

Last updated April 27, 2026

Written by

Reviewed by

Tax on Gifts Received from Foreign Nationals

Key takeaways:

Gifts from foreign nationals to US recipients are generally not taxable as income, but large amounts must be reported to the IRS using Form 3520.
Reporting thresholds differ: over $100,000 from foreign individuals or about $20,573 from foreign entities triggers disclosure requirements, and failing to report can lead to penalties up to 25% of the gift’s value.¹
If a gifted asset generates income (like rent or investment returns), that income is taxable, even though the original gift is not.
Cross-border gifting and estate planning require careful strategy and often professional advice to minimize taxes, ensure compliance, and protect wealth across jurisdictions.

High-net-worth individuals from countries around the world often have one or more relatives who live in the US because it is often seen as a relatively stable and safe place for family members and their assets. However, there are a number of important tax and reporting implications to consider when foreign nationals gift (or transfer) assets to children or relatives who live in the US, and planning is needed to minimize potential tax losses connected to foreign gifts. This article focuses on two categories of gifts that can come from foreign nationals:

Gifts of assets that come from abroad.
Gifts of US-based assets made by a foreign person or entity.

A foreign gift is defined as money or property received from a foreign person that the recipient treats as a gift. For tax and reporting purposes, it is important to distinguish between a US person (which includes US citizens, resident aliens, and certain entities), and a foreign national, as the IRS applies different rules and obligations based on the recipient’s status. Gifts from foreign nationals to US persons are generally not taxed in the US and do not count as part of the recipient’s gross income.

The information below provides an overview of things to consider, but keep in mind that asset transfer and estate planning for high-wealth multinationals is an inherently complex topic. You should be prepared to seek appropriate legal and tax advice for your specific situation, and the jurisdictions in which you have assets.

As a rule, when a US citizen or resident (a “US person”) receives foreign gifts — money, real estate, or other assets from foreign individuals or entities — the responsibility for reporting the gift lies with the recipient. Gifts from foreign nationals generally do not count as part of the recipient’s gross income and are not taxable as income. While the United States has no foreign gift tax, the IRS does require gifts that exceed certain thresholds to be reported via Form 3520.² The IRS aggregates gifts received from foreign persons to determine whether thresholds are met. If a gift generates income (such as from an inherited rental property), that will likely be counted as taxable income.³

Different reporting rules depending on who gave the gift

The IRS requires reporting via Form 3520 for gifts received from foreign entities, except for qualified tuition and medical payments.⁴ For other types of gifts, the threshold for reporting varies depending on whether the gift came from an individual or a business⁵:

For gifts from a foreign individual (or their estate), you are required to report only if the aggregate amount exceeds $100,000 during the taxable year. And in such cases, you must separately identify each gift over $5,000.
For gifts from a foreign corporation or partnership, you are required to report if the aggregate amount received from all such foreign gifts exceeded $20,573 for 2026 (the number is adjusted annually for inflation). You also must identify each gift and donor separately. It's important to note that any sums reported are likely to be scrutinized: The IRS specifically refers to them as purported gifts and states that they "may recharacterize purported gifts from foreign corporations or foreign partnerships” — presumably as taxable income.

Failure to adhere to reporting requirements can be costly

The official purpose of the form is not for taxation but for reporting purposes and to ensure compliance with IRS regulations and tax laws. Form 3520 must be filed by the 15th day of the fourth month following the end of the tax year in which you receive the foreign gift. Failure to report foreign gifts can lead to penalties and potential audits by the IRS, with penalties equal to 5% of the gift's value per month, not exceeding 25% of the gift.[i] However, in some cases, penalties may be waived if reasonable cause is shown for late or inaccurate filing.

In short, if you receive a gift or bequest from a foreign person, and those funds or assets were held abroad, you likely won't owe taxes on that gift. However, it is essential to comply with reporting requirements by filing Form 3520 in a timely manner for the appropriate tax year in order to avoid penalties and ensure compliance with IRS rules.

2. Gifts of US-based assets have different rules and are more likely to be taxed

Many nonresident, non-US citizens own tangible assets (such as real estate) and intangible assets (such as brokerage accounts, bank accounts, and annuities) in the United States. Transferring those US-based assets — whether by gift or inheritance — comes with tax implications that can be quite complex, and specific professional guidance for your situation is always advisable. Below are key issues to be aware of.

Gifts and inherited assets are subject to the same general rules

Estate and gift taxes are usually lumped together because they are both types of transfer tax and share many of the same rules, rates, and exemption amounts under US gift tax rules. Both US citizens and green card holders are subject to these rules, regardless of where they live. For example, US estate taxes are paid by the estate, not the person inheriting assets; similarly, gift taxes are paid by the person giving the gift, not the person receiving it. When gifts or inherited assets go over a certain threshold, they are taxed at a rate that can reach as high as 40%. For most, that threshold is quite high: There is a combined exemption for lifetime gifts and estate assets, which is set at $15M for 2026. However, for some people, the threshold is set much lower.

Gifts from US citizens or green card holders to foreign persons are subject to US gift tax rules, which differ from those applicable to foreign gifts.

The gift and estate tax disparity for foreign nationals with US assets

Not everyone gets the $15M exemption because it is determined by residency status and specific transfer tax rules:

Generally speaking, a US citizen or foreign national domiciled in the United States gets a $15M estate tax exemption; after that amount, their estate is responsible for up to a 40% tax.
Non-domiciled foreign nationals get just a $60,000 exemption — and are responsible for up to 40% of estate taxes above that amount.

The disparity is clearly significant, but the estate and gift tax exemption is not always well understood. The US Internal Revenue Service domiciliary rules for estate tax purposes can be nuanced and complicated: For example, individuals present in the US on nonresident visas (such as G-4 visas) may be considered US-domiciled for estate and gift tax purposes, even though they are considered nonresidents for US income tax purposes. The US also has tax treaties with several foreign countries, which may allow for more generous exemptions or have other tax implications that can affect a US or foreign estate.

Effective gift and estate tax planning for foreign nationals

Multinational families that want to protect their accumulated wealth should plan carefully for the best way to transfer assets across national boundaries — and to the next generation. Nonresidents with US assets must be particularly cognizant of the wide range of laws and taxation rules across different countries. When planning for cross-border asset transfers, it is crucial to understand foreign gift tax rules and relevant tax laws, as these can significantly impact reporting requirements, tax obligations, and compliance. The best solution for your individual situation will likely be found in consultation with a specialized professional who understands your financial goals and is familiar with the rules in the jurisdictions where you live and have assets, and where your family members and potential beneficiaries live. Having said that, it may be worth exploring how gifting and estate planning strategies can be used in tandem to help reduce taxes owed on transferred assets.

Gifting assets while the giver is still alive

There is an annual exclusion for "present value" gifts of up to $19,000 for 2026, which means you can give anyone up to $19,000 without issue, and you don't have to report it. However, complications arise when gifts of US-based assets exceed that amount. Under US gift tax rules, the person giving the gift may need to file a gift tax return — IRS Form 709 — for every person who receives more than $19,000 per year. And when the gift giver is a nonresident foreign national, all lifetime gifts are still subject to the low $60,000 exemption. In other words, once the combined value of all reported lifetime gifts — to all recipients — goes over $60,000, the nonresident giver has to start paying gift taxes of up to 40%.

Using US life insurance to overcome the estate tax disparity

In many cases, there's no need to transfer assets right away via annual gifts. For example, if a foreign national purchases a home in the US for their children to live in, formal transfer of ownership may not have to happen right away — it can be done later, via the parent’s will and estate. While taxes may be owed at that point, US-denominated life insurance can help by providing the liquidity needed to cover potential estate taxes without having to sell all or a portion of the home or other holdings, preserving the estate's value for heirs.

Nonresident life insurance policies are a powerful way to help bridge the estate tax disparity because death benefit payments are generally exempt from federal estate taxes. While the nonresident exemption for estate assets is limited to $60,000, life insurance benefits are considered separate from the estate and not subject to the same limitations. That also means that the money is transferred to beneficiaries without going through the probate process, which can be time-consuming for a large estate.

These features make life insurance an attractive wealth-transfer vehicle for many foreign nationals with US-based assets. Permanent universal or whole life insurance that builds cash value can also provide a number of other advantages when it comes to estate planning and preserving family wealth⁷:

Portfolio diversification and risk mitigation: Permanent, whole life insurance builds cash value at a guaranteed rate and is among some of the most conservative products available. A policy can build US-denominated cash value that can be accessed while the policyholder is still alive, acting as an effective hedge against economic downturns in one's home country, fluctuating exchange rates, and other forms of geopolitical risk.⁸
Asset protection: Life insurance policies are generally protected from creditors and bankruptcy. This can provide an additional layer of protection for foreign nationals' assets.

Have a specialist help match the appropriate life insurance solution with your estate planning goals.

If you’re a foreign national with US residency, a Guardian financial advisor will work closely with you on a one-to-one basis and then tailor an estate planning solution that precisely fits your needs. Or, if you're a nonresident with ties to the US, ask about the Global Citizens Program.

Frequently asked questions about taxes on gifts from foreign nationals

As a general rule, when a gift comes from a nonresident foreign national, the recipient is usually not taxed on the gift itself, and it does not count toward gross income. That's because the IRS does not have jurisdiction over gifts that come from overseas from nonresident, non-US citizens. However, gifts above certain thresholds must be reported to the IRS via Form 3520, and failure to report in the current tax year could result in penalties up to 25% of the value of the gift. Gifts totaling over $100,000 from foreign individuals must be reported, but the threshold for reporting gifts from foreign corporations or partnerships is much lower, currently set at just over $20,573 in 2026 (adjusted every year for inflation).

While gifts from foreign nationals are not ordinarily subject to tax, according to gift tax rules, they must be disclosed if the amount goes above a certain level. The IRS requires reporting via Form 3520 for gifts received from foreign sources, and the threshold for reporting varies depending on the type of entity⁹:

For gifts from a foreign individual (or their estate), you are required to report only if the aggregate amount exceeds $100,000 during the taxable year. And in such cases, you must separately identify each gift in excess of $5,000.
For gifts from foreign partnerships or corporations, you are required to report if the aggregate amount received from all such entities exceeded $20,573 for 2026 (the number is adjusted annually for inflation). You also must separately identify each gift and donor.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed.

The cash value of a whole life insurance policy is a guaranteed, tax-deferred asset that can be accessed through policy loans or withdrawals, subject to the terms of the policy.

Financial advisor”/“advisor” is used generally to describe insurance/annuity and investment sales and advisory professionals who may hold varied licensing as insurance agents, registered representatives of broker-dealers, and investment advisory representatives (IAR) of registered investment advisors, respectively. Only those representatives who use advisor in their title or otherwise disclose their status and meet the necessary licensing or registration requirements provide investment advisory services.

1 26 CFR 601.602: Tax forms and instructions, Internal Revenue Service Page 27, section .47 of RevProc 2025-32.

2 U.S. Gift Tax for Expats: Complete Guide to Giving & Receiving, Greenback Expat Tax Services, January 30, 2026.

3 About Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, Internal Revenue Service, January 23, 2026.

4 Ibid.

5 Gifts from foreign person, Internal Revenue Service, January 23, 2026

6 Foreign Gift Reporting, Penalties & Form 3520, Frost Law.

7 Whole life insurance is intended to provide death benefit protection for an individual’s entire life. With payment of the required guaranteed premiums, you will receive a guaranteed death benefit and guaranteed cash values inside the policy. Guarantees are based on the claims-paying ability of the issuing insurance company. Dividends are not guaranteed and are declared annually by the issuing insurance company’s board of directors. Any loans or withdrawals reduce the policy’s death benefits and cash values and affect the policy’s dividend and guarantees. Whole life insurance should be considered for its long-term value. Early cash value accumulation and early payment of dividends depend upon policy type and/or policy design, and cash value accumulation is offset by insurance and company expenses. Consult with your Guardian representative and refer to your whole life insurance illustration for more information about your particular whole life insurance policy.

8 Gifts from foreign person, Internal Revenue Service, January 23, 2026

9 Ibid.

Do you have to pay taxes on gifts received from foreign nationals?

Get help from a team that understands the challenges faced by foreign nationals

Different reporting rules depending on who gave the gift

Failure to adhere to reporting requirements can be costly

2. Gifts of US-based assets have different rules and are more likely to be taxed

Gifts and inherited assets are subject to the same general rules

The gift and estate tax disparity for foreign nationals with US assets

Effective gift and estate tax planning for foreign nationals

Gifting assets while the giver is still alive

Using US life insurance to overcome the estate tax disparity

The Global Citizens Program

Have a specialist help match the appropriate life insurance solution with your estate planning goals.

Frequently asked questions about taxes on gifts from foreign nationals

Do I have to pay taxes on a gift from a foreign person?

What is the gift limit for 2026 from a foreign country?

Disclaimer8864215.1•Exp 4/28angle down

Different reporting rules depending on who gave the gift

Failure to adhere to reporting requirements can be costly

2. Gifts of US-based assets have different rules and are more likely to be taxed

Gifts and inherited assets are subject to the same general rules

The gift and estate tax disparity for foreign nationals with US assets

Effective gift and estate tax planning for foreign nationals

Gifting assets while the giver is still alive

Using US life insurance to overcome the estate tax disparity

Frequently asked questions about taxes on gifts from foreign nationals