Money from family abroad and sending money home: the US tax rules
Your parents sent money for a down payment. Or you send money to your mother every month. Both situations make people nervous about taxes, and usually about the wrong thing. There is usually no tax, but sometimes there is a report you must file.
You received money from abroad
A gift or inheritance from a foreign person isn't income. There's no US income tax on it.
But if during the year you received more than $100,000 from foreign individuals (or a foreign estate), you have to file Form 3520. Gifts from relatives and people related to them are added together. Each gift over $5,000 is listed separately.
For gifts from foreign corporations and partnerships the threshold is much lower — about $20,000, adjusted each year.
Form 3520 is due with your tax return, including extensions. It's an information return, not a tax, but the penalty for missing it is steep: 5% of the gift for each month it's late, up to 25%. On a $200,000 gift that's up to $50,000.
Gift or loan
If the money is a loan, it isn't a gift and no Form 3520 is needed for it. But you have to be able to show it's a loan: an agreement, a repayment schedule, actual repayments. A "loan" nobody repays may be treated as a gift.
What happens next
The gift itself isn't taxed, but what it earns is. Interest on that money in a US account, investment gains, rent from a property bought with it are all ordinary income.
Your bank may ask where a large wire from abroad came from. That's the bank's own check, not the IRS; a letter from your relative and bank statements are usually enough.
You send money to family
Money for your parents or siblings doesn't reduce your tax. It's a personal gift, not an expense.
If one person received more than $19,000 from you during the year (the 2026 limit), you file Form 709. Tax is almost never due: the amount is subtracted from your lifetime exemption, which is $15 million per person in 2026. The form keeps track of it.
The new 1% tax on cash transfers
Since January 1, 2026, a 1% tax applies to international transfers paid for with cash, a money order or a cashier's check. The transfer company collects it. Transfers funded from a US bank account or a US debit or credit card are exempt.
The practical takeaway: if you send money home regularly, pay from your bank account or card, not with cash at a counter.
In short
- a gift from abroad isn't taxed, but over $100,000 in a year means Form 3520;
- the penalty for a missed 3520 is up to 25% of the gift;
- document a loan, or it may be treated as a gift;
- sending over $19,000 to one person in a year means Form 709, with tax almost never due;
- send from an account or card to avoid the 1%.
If a large gift has already arrived and no Form 3520 was filed, it's better to fix it before the IRS writes to you. I can help.
Sources: Instructions for Form 3520, IRS: Gift tax FAQ, IRC §4475 and Notice 2025-55 (remittance tax). Checked October 26, 2026.