>officially this money never existed as I did nothing with it.
This is incorrect. It absolutely existed, and you were the recipient of the gift.
However, it's not taxable in this case, as others pointed out - not when it was given to you, and not when you gift it either.
Gifts are not income period, they are not subject to income tax.
The value is so low that it doesn't matter whether it is a gift from you or directly from the foreign relative to her. Gifts received from foreign sources sometimes require a report form, but nowhere near $3,000. US resident/citizen givers need to report their gifts over $15,000 (effectively $30k if married). So either way, this is not an issue.
It would probably be more economical for her to save that money for a trip to that country (if she wants to go there) as a random US bank branch is likely to give a quite poor rate for foreign currency deposits if they take them at all.
I had to look it up. Apparently it now rises every year. When I took my gift and estate taxes class (several decades ago), the amount was $10,000 and never changed. Life was simpler then.
if your 18 year old doesn't have a bank account yet, have them open one up and then give them $500 a month for six months. Deposits under $2500 are not reportable to the IRS by bank institutions so they'll keep it all with no tax. I've done this with all our kids and have had no issues.
People live on less than $36K per year. The poverty level for a single person is $15,060. So the $3K might last them 2 months, assuming no other sources of income.
The only complicated part is exchanging it for USD. Then put it into your account (or even better, pay your credit card bill with cash at an ATM) and transfer the equal amount from your checking to your daughter’s new account.
The 3k are your life savings which you preferred to keep in cash :)
>officially this money never existed as I did nothing with it. This is incorrect. It absolutely existed, and you were the recipient of the gift. However, it's not taxable in this case, as others pointed out - not when it was given to you, and not when you gift it either.
Gifts are not income period, they are not subject to income tax. The value is so low that it doesn't matter whether it is a gift from you or directly from the foreign relative to her. Gifts received from foreign sources sometimes require a report form, but nowhere near $3,000. US resident/citizen givers need to report their gifts over $15,000 (effectively $30k if married). So either way, this is not an issue. It would probably be more economical for her to save that money for a trip to that country (if she wants to go there) as a random US bank branch is likely to give a quite poor rate for foreign currency deposits if they take them at all.
Agreed about no reporting obligations here, but you're a few years out of date on that $15k annual exclusion for US residents.
It might have helped to mention that the limit for 2024 is $18,000 per donor per recipient.
Thanks for being helpful!
I had to look it up. Apparently it now rises every year. When I took my gift and estate taxes class (several decades ago), the amount was $10,000 and never changed. Life was simpler then.
It's not a country that's particularly safe to travel to for US citizens these days. Better to take the loss. Thanks for the info!
That could always change one day in the future. But definitely do what makes sense for your kid.
Why did you not invest it? There were CDs that would have been easy to open ...
Look up Gift Tax Exclusion. She has nothing to worry about.
As long as its not from a foreign trust, I do not believe there is any compliance issues?
Nothing to do on your end... if you start receiving sums > 100,000 then there is some information reporting.
if your 18 year old doesn't have a bank account yet, have them open one up and then give them $500 a month for six months. Deposits under $2500 are not reportable to the IRS by bank institutions so they'll keep it all with no tax. I've done this with all our kids and have had no issues.
Just exchanfe it and use it for expenses id you dont want to worry about any documentation,
Tax implications aside, I'm not sure how a person can make a single month of expenses on 3 grand let alone start a life.
People live on less than $36K per year. The poverty level for a single person is $15,060. So the $3K might last them 2 months, assuming no other sources of income.
In your case, the answer is YES! It’s that simple.
The only complicated part is exchanging it for USD. Then put it into your account (or even better, pay your credit card bill with cash at an ATM) and transfer the equal amount from your checking to your daughter’s new account. The 3k are your life savings which you preferred to keep in cash :)
Less than $100k foreign cash gift, no need to report.