Money transfer to US from sale of primary home

[Nynn 1]

Hi guys!

I`ve read a lot of answers here on that topic but am still left wondering...

Mom will sell her apartment the day she receives her immigrant visa in hand (not a day before, just to be 100% sure) and we want to do a wire transfer for most of the sum, around $40,000. Now, it is a primary residence so I read she won`t have to pay any tax on the profit, but she technically is still not a LPR, so would that sale be necessary to be filed with the IRS by April 15, 2017?

Also, how do we do the wiring? The banks here will not open an account to someone who has no SSN. Me and my husband have one account, but dropping 40 grand in it all of a sudden - wouldn`t that trigger a flag? And then will we be obliged to somehow report to the IRS that this money is just being transferred and is mom`s and not ours, and she`ll get it back asap??? How do we do this transfer?

Such craziness, on top of everything else petitioners and applicants get to go through!!!!!!!!

Thank you for your responses in advance!!!

[Nynn 1]

Any ideas please?

[teddy k 35]

Talk to the banks manager he can give you an idea of what you have to do and be safe too from the IRS

[Ontarkie 14,221]

~~Moved to Tax and Finances, from K1 P&P~~

[Nich-Nick 3,354]

We use Transferwise for moving large sums of money. Less fees and better exchange rate than banks. She can set up with Transferwise before she leaves and transfer it after she gets a bank account.

Anything she sells prior to taking up residence in the US is really about what her country taxes.

[Nynn 1]

Wow, thank you Nich-Nick for the Transferwise recommendation, I will certainly look it up. Do they send information to the IRS like US banks would? Or does the receiving US bank do that job for us?

Thank you Ontarkie for moving my post to the appropriate section. I had no idea there is a whole TAX section on Visajourney, I`m going to have to start reading it to get more information! This forum is absolutely PRICELESS!

[Nich-Nick 3,354]

Wow, thank you Nich-Nick for the Transferwise recommendation, I will certainly look it up. Do they send information to the IRS like US banks would? Or does the receiving US bank do that job for us?

Thank you Ontarkie for moving my post to the appropriate section. I had no idea there is a whole TAX section on Visajourney, I`m going to have to start reading it to get more information! This forum is absolutely PRICELESS!

Money transfers exceeding $10,000 are actually reported to the US Treasury's Financial Crimes Enforcement Network (FinCEN). It's all about cracking down on money laundering and not taxes. Nothing goes to the IRS. It is part of the Patriot Act of 2001 following 911.

I don't know if Transferwise reports or the receiving bank or both but all reporting is handled for you. We transferred in around $21,000 in February using Transferwise. It took about three days to appear in the bank after pushing the "go" button. Obviously you have to have an open bank account abroad and one in the US to accomplish the transfer so tell momma not to close her account and to get set up with online banking so you can look at her account and check on things.

Edited August 11, 2016 by Nich-Nick

[Nynn 1]

Mom does not have a US bank account, only a Bulgarian one. I cannot open an account for her here. So basically the money must be transferred to my account... Then once she has her SSN I`ll open an account for her and move the money there. Question is, won`t that 40 grand somehow raise a red flag for the IRS?!? When I do my taxes next year, do I report that transaction or it has no bearing on my tax documentation? Is it safe to land all the money in my humble account temporarily???

[Nich-Nick 3,354]

You aren't reading my replies which said--

Do the transfer after she gets a bank account.

No report goes to the IRS when money is transferred.

[Nynn 1]

This means we`d leave all that money in Bulgaria while we travel back home to the USA? I`m afraid I don`t like this option...

[Nynn 1]

Nich-Nick, thank you for being so knowledgeable and patient with me.

I was inquiring at my local bank and they said they can open an account for mom right now with a form called W8BEN. Then they said after she gets the SSN they will "upgrade" it to a regular American resident account. Would this be a viable way to approach the problem, what do you think? My apprehension with this is the fact that there is a 30% tax that a foreigner owes the IRS from any US-based income, taxed straight by the bank. Mom`s house is not US-based though, so it shouldn`t be taxed?!

I am really not very comfortable leaving money still in a Bulgarian bank and waiting for 1-2-3 weeks until mom can open her American account. That is the only reason I search for other options. Please let me know your opinion!

THANK YOU VERY MUCH FOR YOUR TIME!!!

[Nich-Nick 3,354]

Non-residents/foreigners have a different income tax structure. Banks have to hold out money toward tax that may be owed on interest they pay to foreigners. The bank is not a taxing authority. They are simply "withholding", much like your employer holds money out from your paycheck toward income tax you may owe. When you file your tax return, if your tax bill is not as high as estimated, then the extra held out is returned to you in a refund.

So let's say Mom deposits $100,000 in a Bank of America savings account.

They pay the account holder an interest rate of 0.01% per year for keeping money in their bank.

At the end of ONE YEAR, Mom would EARN $10 interest from BOA.

Only that $10 which she EARNS is taxable income. Get it? She made some money and it gets reported to the IRS that she earned $10. Furthermore, if Mom has a W8BEN on file, the bank has to hold out 30% of her earnings toward possible income tax because of her foreigner status. So the bank only puts $7 in her account and sends $3 to the IRS toward possible taxes. If Mom has no job or other income then she won't really have any tax due. She can file a return and get her $3 refund from the IRS.

Look at it on a monthly basis. If Mom has $100,000 deposited and earns 0.01% per year then the bank would pay her 82 cents each month. As long as she is a "foreigner" they have to hold out about 25 cents toward possible taxes and only put 57 cents into her account. Once Mom gets a greencard and SSN, the bank can put the whole 82 cents into her account each month. If it takes three months to get her residency and SSN established, then 75 cents has gone to the IRS toward possible income tax owed. It can be refunded if she owes no income tax.

Remember to go to the bank with her SSN and permanent resident proof and file fform W-9 to replace the W8BEN so the bank can stop holding out that 25 cents each month.

[Nynn 1]

I love you.

Thank you for your time. This is what I figured would happen, but just needed someone to confirm. You are a blessing!