A genuine gift from a parent who is not a US person is not income to you in the US, and you pay no US gift tax on it. But if you are a US person, you may have to report it on Form 3520, and the penalty for not reporting is 5% of the gift per month, up to 25%.
A US person here means a citizen, a green card holder, or an H-1B or L-1 worker who meets the substantial presence test.
When Form 3520 is required
| Gift from | Report on Form 3520 when total gifts in the year exceed |
|---|---|
| Foreign individual or estate (for example, parents in India or the UAE) | $100,000 |
| Foreign corporation or partnership (for example, a parent's company) | $20,573 for 2026 ($20,116 for 2025) |
Gifts from related people are added together. If your father sends $60,000 and your mother sends $50,000 in the same year, you report $110,000. Form 3520 is due with your tax return (April 15, extendable to October 15).
Gift, loan, or business money?
- Gift: keep a short gift letter from your parent and the bank trail (Indian bank to your US account).
- Loan (for example, for a house down payment): sign a written loan agreement with interest at or above the IRS Applicable Federal Rate. Interest you pay may require withholding and Form 1042-S.
- Payment from a parent's company: treated as a gift from a foreign corporation only if it is truly a gift; otherwise it may be taxable income.
What is still taxable
The gift itself is not taxed, but income it earns is. Interest, dividends and gains on the money in your US account, or in an Indian account held in your name, go on your US return.
The India side
Parents in India can send up to USD 250,000 per person per financial year under the RBI's Liberalised Remittance Scheme. Indian banks can collect TCS above ₹10 lakh per year, which can be claimed back against the parent's Indian income tax. Gifts from relatives are not taxable to an Indian resident recipient either. Confirm current TCS rates with your parent's bank or CA.
The Dubai side
The UAE has no personal income tax and no income tax treaty with the US, so the US reporting rules above are the only filings to manage.
Sending money back to India
Since January 1, 2026, a 1% US excise tax applies to remittances funded with cash, money orders or cashier's checks. Transfers from a US bank account or a debit or credit card are excluded.
How VG CPA PC helps
Form 3520 preparation, late-filing relief with reasonable-cause statements, gift-versus-loan documentation for home purchases, and coordination with your family's CA in India.
Talk to an advisorFrequently asked questions
Is money my parents send from India taxable in the US?
No. A gift from a non-US parent is not taxable income to you. You may still need to report it on Form 3520.
When do I file Form 3520 for gifts from parents?
When total gifts from foreign individuals exceed $100,000 in a calendar year. Gifts from related people, such as both parents, are combined.
What is the penalty for not filing Form 3520?
5% of the gift for each month late, up to 25%. Reasonable-cause relief is available in many cases.
My parents sent money from their company in India. Is that different?
Yes. Gifts from a foreign company are reportable above $20,573 (2026) and are reviewed closely to confirm they are not disguised income.
Do my parents pay US gift tax?
No, not on cash sent from a non-US bank account. Foreign donors owe US gift tax only on gifts of US-located property.
My parents are helping with my house down payment. Gift or loan?
Either works if documented. A gift needs a gift letter and bank trail; a loan needs a written agreement at the IRS Applicable Federal Rate.
How much can my parents send from India each year?
Up to USD 250,000 per person per financial year under the RBI's Liberalised Remittance Scheme. Indian TCS can apply above ₹10 lakh.
Is there a US tax on sending money back to India?
A 1% excise tax applies since January 1, 2026, but only on transfers funded with cash, money orders or cashier's checks, not bank-account transfers.
Updated November 2026. General information based on US federal tax law as of November 2026, not legal, immigration or Indian tax advice for your situation. Indian (FEMA, RBI, income tax) points should be confirmed with your Chartered Accountant in India. Please speak with an advisor before acting.