Gift or inheritance from a foreigner: What you need to know

Imagine this: You’re a citizen or tax resident of the United States (a U.S. person), and you receive a gift or inheritance from a non-U.S. person. After the initial excitement of sudden enrichment wanes, you wonder - how does this affect my taxes?

In general

The U.S. doesn’t tax gifts or inheritances. In other words, you can get an unlimited number of gifts and inheritances tax-free. Of course, if you still own those assets at death, your estate may have to pay U.S. estate tax. In 2025, $13.99 million per U.S. person is excluded from U.S. estate and gift tax. Amounts over that are taxed at 40%, unless given to a U.S. citizen, surviving spouse or charity. Additionally, you may have disclosure requirements or be responsible for income taxes on income generated by assets received throughout your lifetime.

The tax favorable rules for receivers of gifts and inheritances don’t apply to givers. A giver who is a U.S. person must pay U.S. gift or estate tax when making gifts or leaving inheritances over the above threshold. A giver who is a non-U.S. person must pay U.S. gift or estate tax on transfers of U.S. situs property (i.e., property that is considered to be located in the U.S.). For example, a non-U.S. person with U.S. real estate could incur gift tax if the property is transferred during life or estate tax if the property is held at death. Moreover, compared to the high exemptions for U.S. persons, the exclusion from U.S. estate tax for non-U.S. persons is only $60,000, and other than the annual exclusion ($19,000 in 2025), no exclusion is available for U.S. gift taxes. In limited circumstances, tax treaties may be available to alter the standard treatment.

Gift or inheritance from a covered expatriate

Since under the default rule, gifts and inheritances aren’t taxed to U.S. recipients, you’re in the clear, right? Not so fast. There is an important exception - The IRS will tax certain gifts and inheritances from “covered expatriates,” although the filing requirement is deferred until the IRS releases Form 708 discussed below.

Generally, a “covered expatriate” is a person who has relinquished their U.S. citizenship or long-term resident status (i.e., relinquishment of a green card held for at least eight of the last 15 calendar years) and meets any of the following criteria: