My wife (Japan/USA dual citizen) will be receiving a generous gift from her parents (Japanese nationals, 72 years old, USA residents for 25 years). I am trying to figure out if receiving this will be considered a gift by the NTA and if we will need to pay gift taxes.
A few of the key points:
* My wife will receive $34,000 total, which includes $17,000 from her mother and $17,000 from her father
* The money will be sent directly from her parents’ USA bank account to my wife’s USA bank account.
* My wife will invest the money in her Vanguard brokerage account in the USA to be invested into VTSAX.
* The money will not be transferred to Japan.
Does anyone have advice or resources on whether this will be considered a gift by the NTA? Thank you in advance!
by japanFIRE2028
8 comments
If your wife lives in Japan, or has lived in Japan in the past 10 years, she is subject to Japanese gift tax with respect to all gifts, regardless of the location of the assets or the characteristics of the donor.
**”The money will not be transferred to Japan.”**
japanese tax authorities **will have no way of learning** about transactions beyond their jurisdiction
think about it
Don’t be the guy who F-ed around and found out the hard way that you can’t get out of paying taxes.
You could postpone taxes and claim the money as early inheritance. Would make sense if you plan to invest it
u/starkimpossibility, Your knowledge and willingness to share provides so much benefit. I am always infinitely grateful for your advice.
I read through some of your older posts, and I wanted to see if you have any thoughts on this.
Would a $34,000 contribution from my wife’s parents to our USA/Japan dual citizen child’s American 529 account be considered by the NTA to be similar to the Japanese educational expenses trust account? Or would we likely need to pay gift tax for this type of contribution?
And an additional, maybe more simple question would be if contributions from a grandparent to our child’s 529 would be considered gifting to the child or a gift to the account owner (me). I believe our child is the beneficiary, but I am the account owner.
break the transfers up into four separate transfers split between you and your wife.
1,100,000 jpy to your wife before january 1st 2024, and 1,100,000 jpy to your wife after january 1st 2024.
Same scheme to you.
This would be your legal annual gift allowance for the calendar year and not violate any laws. You would need to sacrifice around 400,000 yen of the total amount to do this, but it would all be legal and tax free, as long as you have received no other gifts over the course of the year.
My understanding was that I and my wife count as one household for tax purposes so the 1.1m gift can only happen to one of us in one tax year. If we both receive 1.1m gifts, it equates to 2.2m of gifts in one tax year to my household.
Am I wrong in this understanding?
Is it really okay to double my calculation of the gift tax allowance from 1.1m to 2.2m in one tax year if it is 2 x 1.1m payments to my wife and to me?
I am not an expert on this. So I am genuinely asking for what people understand to be correct on gift tax. If you are married, is the 1.1m gift tax allowance per person or per household? (Both being resident in japan for tax purposes for over 20 years. Husband working but wife not working and wife with zero annual income on the tax return Nenmatsu Chosei)
(Thank you for this very helpful and specific advice on this topic!)
I am not sure about the the spousal visa so take this with a grain of salt:
There is a gap for the first 5 years while living here you do not need to pay tax on international assets, at least this is the case for things like stocks and housing however I am not sure about gift tax so you would need to check on this.
Best bet is to have a quick chat with an accountant and have them do you taxes this year, they would give you some ‘free’ advice while doing it for you.
I’m not american but anecdotally, most of the time when I hear Americans talk about stuff like this they just don’t report it to the government or spend it directly from parents account. Never done this and can’t recommend it but I’ve literally never heard of anyone getting caught for this.
(Keen to hear examples of people getting caught)