Olivier Custeau, Fiscaliste, B.A.A., M. Fisc., EA

Gifts to Children of a U.S. Citizen

US taxation  —   — Share

7

Question :

Hello M. Custeau,

I am a Canadian resident and I want to make a gift of $15,000 to each of my two grandchildren who reside in the United States. Is this amount taxable in the hands of my grandchildren and do I have to mention to the bank that it’s a gift?

Thank you for your help and have a nice day.

Answer :

Hello,

Thank you for your email. If you are a U.S. citizen resident in Canada, you can make gifts up to $15,000 to your grandchildren without triggering U.S. taxes and you will not have to do anything (the gift does not have to be reported to the IRS when it does not exceed the threshold). The limit for the 2021 tax year is $15,000/person. For tax year 2022, it will normally be $16,000/person. If you exceed this amount, a gift tax return will have to be filed and you can claim an exemption. Therefore, your grandchildren will never have to pay tax on these gifts since it is the donor – a U.S. citizen or resident – who may have a potential U.S. tax liability.

Hoping everything is clear, do not hesitate to contact me for any questions.

Greetings,

Olivier Custeau, B.A.A., M.Fisc., EA

Tax master and Enrolled Agent