Taxes on a Foreign Wire Transfer

Bank transfers make it relatively easy to move money around the world. Banks in the United States and around the world carry out wire transfers using funds you provide and an eight-digit SWIFT code. There are fees charged on both ends of the transaction. If you have money wired to the United States from a foreign country, there may be some tax implications.

Incoming Wires

The Internal Revenue Service doesn't levy taxes on wire transfers from abroad; nor do any states. Although American citizens and legal permanent residents must report money earned abroad -- and the money may also be taxable in your state of residence -- wire transfers by themselves aren't considered earned income, investment interest, a dividend or a capital gain.

Gift Tax Implications

If the sender of a wire transfer is an American citizen or legal permanent resident, she may need to report the transfer to the IRS on a gift tax return if it exceeds $14,000 for the tax year (as of 2013). This applies whether no matter where the sender orders the transfer. The amount over $14,000 applies to the unified estate and gift tax exemption. In 2013, this exemption amount reached $5.25 million. That means any amount of gifts over $14,000 in a single year, combined with any taxable estate assets, will escape the gift/estate tax only if the value remains below $5.25 million.

Receiving Funds

Outside of the possible gift tax amount, there's no IRS reporting requirement on senders who live in other countries. Nor does a recipient in the United States need to report a wire transfer unless he receives more than $100,000 via bank wires in a year. In this case, the recipient needs to file Form 3520. There's no tax due from the recipient on money received from abroad as a gift.

Bank Fees

There may be no taxes due, but you will have some bank fees to pay. A survey of the 10 largest US banks conducted in early 2013 found the average fee for an international outgoing transfer at $45.50. The fee on incoming wire transfers from abroad averaged $17.50.

Wiring From Abroad

If you're in a foreign country and sending money home, there may be restrictions. In Thailand, for example, the cap is $50,000 on outgoing bank wires. You can't send Thai currency out of the country at all. The bank will charge a fee, and the host country may also levy taxes on all bank wires.

About the Author

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.