The amount of money someone can send to their parents from the USA, particularly to India, can be influenced by gift tax exemption rules. In 2024, the annual gift tax exclusion is $18,000 per individual recipient.
While there is no limit on the amount of money an NRI (Non-Resident Indian) in the US can send to their parents in India, amounts exceeding the annual gift tax exclusion might have implications under US tax law. Here's a breakdown:
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Annual Gift Tax Exclusion: In 2024, you can gift up to \$18,000 per person without needing to report it to the IRS (Internal Revenue Service). This means an individual can gift \$18,000 to each parent without triggering gift tax implications.
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Gift Tax Reporting (Form 709): If you gift more than \$18,000 to one person in a year, you'll need to file Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return) with the IRS. Filing this form doesn't necessarily mean you'll owe gift tax. It primarily reports the gift to the IRS.
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Lifetime Gift and Estate Tax Exemption: The US has a lifetime gift and estate tax exemption. For 2024, this is a substantial amount (\$13.61 million per individual). Any amount exceeding the annual gift tax exclusion reduces this lifetime exemption. Therefore, while you may not pay gift tax immediately, it could affect your estate tax liability in the future if your total gifts over your lifetime exceed the exemption amount.
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Recipient's Tax Implications (India): In India, gifts received from close relatives are generally tax-free. Parents receiving money from their children who are NRIs are not subject to tax on the received amount in India.
Here's a table summarizing recent historical exemption limits:
| Calendar Year | Exempted Amount ($) |
|---|---|
| 2021 | 15,000 |
| 2022 | 16,000 |
| 2023 | 17,000 |
| 2024 | 18,000 |
In conclusion, while there's no upper limit on how much money can be sent, gifts above \$18,000 per parent in 2024 require reporting and affect your lifetime gift and estate tax exemption in the USA. The recipients (parents) in India typically won't have to pay tax on these gifts.
