Holiday Gifts and U.S. Gift Tax for Non-Residents
The United States taxes gifts, and it taxes some gifts made by people who have never lived there. For a non-resident, the rule turns on what is being given rather than on who is giving it: U.S. real estate and physical things located in the United States are within reach, and most financial assets are not. It is a distinction that catches families at exactly the time of year they are most likely to be generous.
The rule in one paragraph
A person who is not a U.S. citizen and is not domiciled in the United States is subject to U.S. gift tax only on transfers of property situated in the United States. For gift tax purposes, that means real property here and tangible personal property here. Most intangible property — shares in companies, including U.S. companies, and similar financial interests — is outside the U.S. gift tax net for a non-domiciled giver, which is the opposite of the position for estate tax.
Domicile is not the same as residency for income tax. A person can be a U.S. tax resident by day count and still not be domiciled here, and a person can be domiciled here without being a citizen. Domicile is about where you have made your permanent home, with the intention of staying.
What that means for ordinary holiday generosity
| The gift | Generally within U.S. gift tax for a non-domiciled giver? |
|---|---|
| A house or condominium in Florida, transferred to a child | Yes. U.S. real property. |
| A car, boat, jewellery or artwork physically located in the United States | Yes. Tangible property here. |
| Cash handed over in person inside the United States | Treated as tangible property here, and a common trap. |
| A transfer from a foreign bank account to a family member's account | Generally not, as a transfer of intangible property. |
| Shares in a U.S. corporation | Generally not for gift tax, although the estate tax rules differ sharply. |
The contrast between the last two rows and the first two is the whole subject. The same value, given in different forms, produces different answers.
The exclusions that apply
An annual amount per recipient can be given free of gift tax, and it is adjusted for inflation, so the current year's figure should be confirmed rather than assumed. A larger annual figure applies to gifts to a spouse who is not a U.S. citizen: the unlimited marital deduction that applies between citizens does not apply there, which is a frequent and expensive surprise in mixed-nationality families.
Direct payments of someone's tuition to the institution, and of their medical expenses to the provider, sit outside the gift tax rules entirely when they are paid directly rather than reimbursed. For families supporting a student in the United States, that route is often better than a transfer of cash.
What a non-domiciled giver does not have is the large lifetime exemption available to U.S. citizens and domiciliaries. Planning that relies on it does not work here.
The estate tax point, because it is the larger one
A non-resident's U.S. estate is a harder problem than their gifts. U.S.-situs assets at death — and for estate tax that does include shares in U.S. corporations — are taxable above an exemption of $60,000, unless an estate tax treaty provides something better. The gap between that figure and the exemption available to a U.S. person is enormous.
This is why the holiday conversation about giving a family member a U.S. property often turns into a different conversation about how U.S. assets are held in the first place. The two questions belong together, and the second one is rarely urgent until it suddenly is.
Reporting, even when no tax is due
A gift within the annual exclusion generally needs no return. Above it, a gift tax return is required for the year, and it is filed by the giver rather than the recipient. Separately, a U.S. person who receives large gifts or bequests from foreign persons has their own reporting obligation, with penalties attached to missing it. That obligation belongs to the recipient, sits on a different form, and is missed constantly — a U.S. child receiving help from parents abroad is the classic case.
In other words: a transfer can be entirely free of U.S. gift tax and still generate a filing requirement on the other side of it.
Before you give anything this December
- Establish what the property is and where it sits. Real, tangible, here: that combination is the one that costs money.
- Check the current year's exclusion figures rather than last year's.
- If the recipient is a U.S. person, check whether they have a reporting obligation of their own.
- If a spouse who is not a U.S. citizen is involved, look at the position before the transfer rather than after.
- If U.S. real estate is the subject, treat it as a structural question and not a seasonal one.
Figures in this area change annually and treaties vary by country, so confirm both against your own facts before acting. The general enquiry form is the route in if you want that checked, and the personal tax page covers the surrounding filings.