best way to receive large sum of money from another country

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

best way to receive large sum of money from another country

Post by sil2017 » Wed Jun 13, 2018 4:26 pm

I will be receiving about 200k Canadian dollars from my parent as a gift. The family member is Canadian and lives in Canada. I have dual citizenship ( Canada and USA) but have lived in the USA for over 30 years. I grew up in Canada. I only hold a USA passport.

How do I claim the gift money? Do I open an account in Canada? If I do, do I use my parent or other member of my family address for the bank account or my USA address? Do I pay tax on the 200k CDN ? I read somewhere that you can fill an IRS form and receive the money without being taxed. Is this true? Will this be a headache for my family member if I fill out the form? Will the IRS form require the social insurance number from my parent?

Or is it best to wire the money to my USA bank account? If so, is there a bank I can deposit the amount in CDN or do I need to convert it to USA first?

Any other suggestion?

Not sure if it may complicate the matter should I decide in the future to move back to Canada permanently or else for several years.

Thanks very much for your help.

PS. I guess large sum is relative. It is not money that I need to live on.

Tribonian
Posts: 55
Joined: Thu Dec 21, 2017 7:33 am

Re: best way to receive large sum of money from another country

Post by Tribonian » Wed Jun 13, 2018 4:41 pm

U.S. gift taxes are paid by the donor but the recipient has to file a form 3520 if the amount exceeds 100K U.S.D.

No idea how Canada treats gifts for tax purposes (they may ignore them altogether) but receiving the gift in the US seems a good idea.

I’d get a tax lawyer for advice.
NB I have no professional expertise or personal experience, so I wouldn’t rely on any of my impressions.

User avatar
dm200
Posts: 17212
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: best way to receive large sum of money from another country

Post by dm200 » Wed Jun 13, 2018 4:43 pm

Whatever you do or do not do - make sure you do not try to hide it or appear to hide the transfer.

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: best way to receive large sum of money from another country

Post by dbr » Wed Jun 13, 2018 4:56 pm

I am not hugely knowledgeable, but the one time I wired money from the US to another country the bank converted my dollars to the foreign bank currency. That may mean your donor will have C$ converted to US$ for you to receive them.

I would start by talking to your US bank about what is wanted. They can probably assure you that you can receive a wire for the money in US$ into your US bank account.

User avatar
dm200
Posts: 17212
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: best way to receive large sum of money from another country

Post by dm200 » Wed Jun 13, 2018 4:59 pm

I would deal with one large financial institution in each country - and make sure all is 100% in compliance with applicable laws and regulations.

jebmke
Posts: 8153
Joined: Thu Apr 05, 2007 2:44 pm

Re: best way to receive large sum of money from another country

Post by jebmke » Wed Jun 13, 2018 5:00 pm

dbr wrote:
Wed Jun 13, 2018 4:56 pm
I am not hugely knowledgeable, but the one time I wired money from the US to another country the bank converted my dollars to the foreign bank currency. That may mean your donor will have C$ converted to US$ for you to receive them.

I would start by talking to your US bank about what is wanted. They can probably assure you that you can receive a wire for the money in US$ into your US bank account.
I've did it both ways when wiring myself money to EU. Sometimes I bought Euros in the US and then wired them. Other times I wired dollars and my receiving bank bought Euros. A lot depends on the capability of the bank at either end. When I was using a regional bank in the US they had limited ability to buy Euros so I would have them send me dollars.
When you discover that you are riding a dead horse, the best strategy is to dismount.

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: best way to receive large sum of money from another country

Post by dbr » Wed Jun 13, 2018 5:01 pm

jebmke wrote:
Wed Jun 13, 2018 5:00 pm
dbr wrote:
Wed Jun 13, 2018 4:56 pm
I am not hugely knowledgeable, but the one time I wired money from the US to another country the bank converted my dollars to the foreign bank currency. That may mean your donor will have C$ converted to US$ for you to receive them.

I would start by talking to your US bank about what is wanted. They can probably assure you that you can receive a wire for the money in US$ into your US bank account.
I've did it both ways when wiring myself money to EU. Sometimes I bought Euros in the US and then wired them. Other times I wired dollars and my receiving bank bought Euros. A lot depends on the capability of the bank at either end. When I was using a regional bank in the US they had limited ability to buy Euros so I would have them send me dollars.
Right, when I wired money the recipient wanted payment in his local currency, so it went that way.

thangngo
Posts: 1138
Joined: Sun Feb 26, 2017 2:08 pm

Re: best way to receive large sum of money from another country

Post by thangngo » Wed Jun 13, 2018 5:06 pm

sil2017 wrote:
Wed Jun 13, 2018 4:26 pm
I will be receiving about 200k Canadian dollars from my parent as a gift. The family member is Canadian and lives in Canada. I have dual citizenship ( Canada and USA) but have lived in the USA for over 30 years. I grew up in Canada. I only hold a USA passport.

How do I claim the gift money? Do I open an account in Canada? If I do, do I use my parent or other member of my family address for the bank account or my USA address? Do I pay tax on the 200k CDN ? I read somewhere that you can fill an IRS form and receive the money without being taxed. Is this true? Will this be a headache for my family member if I fill out the form? Will the IRS form require the social insurance number from my parent?

Or is it best to wire the money to my USA bank account? If so, is there a bank I can deposit the amount in CDN or do I need to convert it to USA first?

Any other suggestion?

Not sure if it may complicate the matter should I decide in the future to move back to Canada permanently or else for several years.

Thanks very much for your help.

PS. I guess large sum is relative. It is not money that I need to live on.
Wire transfer. Easy.

Marylander1
Posts: 132
Joined: Sat Jan 04, 2014 3:18 pm
Location: Baltimore & DC

Re: best way to receive large sum of money from another country

Post by Marylander1 » Wed Jun 13, 2018 5:07 pm

If you're close to a TD Bank, they may be a good option, since TD has branches in the US and Canada. As a small example, TD Customers from either country can use ATMs in the other country at no cost.

https://www.tdbank.com/net/absearch/

Marylander1

theplayer11
Posts: 424
Joined: Tue Jul 22, 2014 8:55 pm

Re: best way to receive large sum of money from another country

Post by theplayer11 » Wed Jun 13, 2018 5:10 pm

I used transferwise to send money to the UK to pay son's rent. Can't beat the exchange rate

neilpilot
Posts: 1739
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: best way to receive large sum of money from another country

Post by neilpilot » Wed Jun 13, 2018 5:16 pm

theplayer11 wrote:
Wed Jun 13, 2018 5:10 pm
I used transferwise to send money to the UK to pay son's rent. Can't beat the exchange rate
Maybe an exchange rate good for rent money is a bit high for $200k. Just saying...

ivk5
Posts: 329
Joined: Thu Sep 22, 2016 9:05 am

Re: best way to receive large sum of money from another country

Post by ivk5 » Wed Jun 13, 2018 5:44 pm

theplayer11 wrote:
Wed Jun 13, 2018 5:10 pm
I used transferwise to send money to the UK to pay son's rent. Can't beat the exchange rate
+1 for transferwise. I’ve used for amounts up to 5 figures (though not 6). Have not found a bank that can beat them. Also nice to see transparency (true spot rate plus clear fee) rather than the obfuscation of fees buried in rate spread (plus wire fees!).

Don’t have knowledge on gift tax reporting considerations.

User avatar
whodidntante
Posts: 3730
Joined: Thu Jan 21, 2016 11:11 pm

Re: best way to receive large sum of money from another country

Post by whodidntante » Wed Jun 13, 2018 5:55 pm

Transferwise is quite cheap, but it would be worth looking harder for a large transfer like yours. Another downside is that Transferwise is slow. I think you will find Interactive Brokers to be best.

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Wed Jun 13, 2018 7:36 pm

Thanks everyone for your suggestions . I used to bank at TD so I will ask . I rather not convert from CDN to USD if possible .

Gill
Posts: 4466
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: best way to receive large sum of money from another country

Post by Gill » Wed Jun 13, 2018 7:45 pm

sil2017 wrote:
Wed Jun 13, 2018 7:36 pm
Thanks everyone for your suggestions . I used to bank at TD so I will ask . I rather not convert from CDN to USD if possible .
If you’re happy holding CDN, that seems to be the best bet. Open an account at TE Bank and deposit it from there.
Gill

SlowMovingInvestor
Posts: 751
Joined: Sun Sep 11, 2016 11:27 am

Re: best way to receive large sum of money from another country

Post by SlowMovingInvestor » Wed Jun 13, 2018 8:02 pm

There are no taxes in the US for gifts received from Non Resident Aliens.

However, as was pointed out before, you need to file IRS form 3520. The penalty for not filing this form is draconian, 5% of gifts received per month, up to 25% of gift.

47Percent
Posts: 270
Joined: Tue Oct 29, 2013 9:59 pm

Re: best way to receive large sum of money from another country

Post by 47Percent » Wed Jun 13, 2018 8:35 pm

There are two completely separate issues here. Make sure you get a handle on each of those before you proceed.

The process of receiving the gift, reporting the gift, and related tax issues in Canada & the US.
The mechanics of getting the money from Canada to the US, and whether you keep it as CAD or convert to USD.

If you decide to open/maintain an account in a foreign financial institution, especially with a balance of over $100K, the ongoing annual reporting requirements need to be considered. It can be done. But it is not nothing. You would be treated no different than someone with a Cayman islands bank account.

IAlso, I don't quite understand your reluctance to convert from CAD to USD, especially considering you have lived here for 30 years and you don't even currently have a bank account in Canada.
Last edited by 47Percent on Wed Jun 13, 2018 10:22 pm, edited 1 time in total.

123
Posts: 3494
Joined: Fri Oct 12, 2012 3:55 pm

Re: best way to receive large sum of money from another country

Post by 123 » Wed Jun 13, 2018 8:49 pm

A "large" Canadian bank should be able to wire USD to a US bank. Large banks typically offer international services and are able to wire funds in a number of currencies. The receiving bank in the US can only normally deposit USD so if they are sent Canadian $ the receiving bank will have it converted at whatever exchange rate they use. The sender has the most control over the exchange rate if they send in the currency used by the receiving bank.
The closest helping hand is at the end of your own arm.

AlohaJoe
Posts: 3565
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: best way to receive large sum of money from another country

Post by AlohaJoe » Wed Jun 13, 2018 9:08 pm

47Percent wrote:
Wed Jun 13, 2018 8:35 pm
If you decide to open/maintain an account in a foreign financial institution, especially with a balance of over $100K, the ongoing annual reporting requirements need to considered. It can be done. But it is not nothing. You would be treated no different than someone with a Cayman islands bank account.

IAlso, I don't quite understand your reluctance to convert from CAD to USD, especially considering you have lived here for 30 years and you don't even currently have a bank account in Canada.
I agree. Keeping it in CDN makes no sense whatsoever. Opening a new account just to receive this money also makes no sense.

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Wed Jun 13, 2018 9:13 pm

The reason I want to hold CDN dollars is in case I move back to Canada for several years . The other reason would be to wait for a better exchange rate . If I open bank in Canada do I use my address or a Canadian address?

I believe HSBS has banks in Canada and USA . Perhaps I can open bank in USA and keep it in CDN instead of converting .

If I do convert from CDN to USA when wiring money to my bank , does bank also need to file form when money is wired from Canada to USA?

I will search for the IRS form for the gifted amount.
Do I fill form for this tax year?
Last edited by sil2017 on Wed Jun 13, 2018 9:24 pm, edited 1 time in total.

AlohaJoe
Posts: 3565
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: best way to receive large sum of money from another country

Post by AlohaJoe » Wed Jun 13, 2018 9:19 pm

sil2017 wrote:
Wed Jun 13, 2018 9:13 pm
The reason I want to hold CDN dollars is in case I move back to Canada for several years . The other reason would be to wait for a better exchange rate .
Holding CDN in case you move back is not a good decision. If you decide to move back to Canada it is trivial to convert CDN at that point; it doesn't make any sense to keep this around in CDN right now for a "just in case" when you've been living in the US for 30 years. If you want to gamble on forex trading, there are better ways to do it than with this money.

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Wed Jun 13, 2018 9:29 pm

Irs 3520 form . Does the giver have to sign form or just the receiver

Ace1
Posts: 198
Joined: Sun Dec 26, 2010 7:29 pm
Location: Twinsburg Ohio

Re: best way to receive large sum of money from another country

Post by Ace1 » Wed Jun 13, 2018 10:01 pm

Sil
If you want to hold some CAD in a Canadian bank, you should.
There is at least one thread in the forum discussing this from a currency risk standpoint.
You might consider the amount as it relates to your total nest egg though, but I certainly
get your wanting to hold it for a more favorable exchange rate.
A currency transaction of that size does allow you to negotiate a better rate than the
Street rate most banks offer. I think you will get a better rate in Canada than in the US.
You will have annual reporting requirements if you hold more than $10k outside the US (FBAR),
and if above $50k (FATCA).
I personally have an account in CAD at ScotiaBank, using my US address. Scotia does offer
US denominated accounts... I suspect the other larger banks do the same.
Ace

User avatar
MossySF
Posts: 2288
Joined: Thu Apr 19, 2007 9:51 pm
Contact:

Re: best way to receive large sum of money from another country

Post by MossySF » Wed Jun 13, 2018 11:16 pm

sil2017 wrote:
Wed Jun 13, 2018 9:13 pm
The reason I want to hold CDN dollars is in case I move back to Canada for several years . The other reason would be to wait for a better exchange rate . If I open bank in Canada do I use my address or a Canadian address?
Unlike others here, I don't think it's a big deal to keep it in a Canadian account. You just have to remember to file FBARS every year because you will be way over the threshold. And don't even think about buying any mutual funds or ETFs in Canada with this money.

Yeah, I know the exchange rates feels bad because CAD was on par with USD back in 2012 but that's an anomaly. Today's exchange is the average historic value and the USD been as high as 1.6X CAD in the past.

A possible option is to transfer to USD and then buy Canadian Stock/Bond ETFs (example EWC). That would effectively put you back into CAD where you can then try to market time exchange rates to your heart's desire.

AlohaJoe
Posts: 3565
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: best way to receive large sum of money from another country

Post by AlohaJoe » Wed Jun 13, 2018 11:33 pm

Don't forget Form 8938 when you file taxes, as well.

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Thu Jun 14, 2018 11:14 am

It seems like using TransferWise to transfer money from CDN to USD into my bank would be the best option .
However is it possible for my parent to purchase vanguard funds in Canadian funds and gift it to me ? For example instead of wiring 200k CDN money , 200k vanguard funds in CDN will be bought instead as a gift . Would IRS treat this the same way and I would just need to fill out form 3520 once?

AlohaJoe
Posts: 3565
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: best way to receive large sum of money from another country

Post by AlohaJoe » Thu Jun 14, 2018 11:18 am

How would they buy Vanguard funds? At their brokerage?

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Thu Jun 14, 2018 11:36 am

alohajoe-

I have a vanguard account in the USA. Can my parent purchase vanguard funds for herself then transfer to my account?

Or could she just purchase the fund for my account in the USA?

I like to keep it as simple as possible and only file once with IRS then to file every year.

informal guide
Posts: 189
Joined: Mon Aug 29, 2016 10:26 am

Re: best way to receive large sum of money from another country

Post by informal guide » Thu Jun 14, 2018 12:41 pm

sil2017 wrote:
Wed Jun 13, 2018 9:29 pm
Irs 3520 form . Does the giver have to sign form or just the receiver
Just the US taxpayer - -the receiver - -has to file the form, as a part of his/her tax return for the year received. Be sure to keep a copy, in case there is ever any question.

fujiters
Posts: 97
Joined: Tue Mar 06, 2018 2:17 pm

Re: best way to receive large sum of money from another country

Post by fujiters » Thu Jun 14, 2018 2:47 pm

whodidntante wrote:
Wed Jun 13, 2018 5:55 pm
Transferwise is quite cheap, but it would be worth looking harder for a large transfer like yours. Another downside is that Transferwise is slow. I think you will find Interactive Brokers to be best.
+1 I've looked into using IB for currency exchange and I think you'll run $10 to do the transfer. ~$3 for the forex trade itself, but there's a $10/month minimum account fee. TransferWise looks like it would cost over $1000.

I haven't used IB for currency exchange though. I think it's probably worth a small trial run (say, transfer $100 to see how it goes) considering how much money is at stake.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

sil2017
Posts: 226
Joined: Mon Jan 23, 2017 7:25 am

Re: best way to receive large sum of money from another country

Post by sil2017 » Thu Jun 14, 2018 3:34 pm

delete

criticalmass
Posts: 451
Joined: Wed Feb 12, 2014 10:58 pm

Re: best way to receive large sum of money from another country

Post by criticalmass » Thu Jun 14, 2018 3:43 pm

Use a service like XE.com or Oanda to save a lot of currency conversion fees and wire charges. I've used XE and they charge no fees (unless you really want a wire, which is just $15). Their currency conversion rates are extremely good, especially compared to a traditional bank international transfer.

ACH/EFT is free, as are paper checks. You can even do a limit order on the currency conversion rate. The only downside is it can take a while to setup the account due to anti-fraud/laundering paperwork they have to do for a new customer.

A bank to bank international wire is probably among the most expensive method. If you have access to a Canada bank, you could always just use the funds for international Mastercard/Visa purchases.

Consult a tax advisor for any tax issues with accepting the money.

fujiters
Posts: 97
Joined: Tue Mar 06, 2018 2:17 pm

Re: best way to receive large sum of money from another country

Post by fujiters » Fri Jun 15, 2018 2:39 am

criticalmass wrote:
Thu Jun 14, 2018 3:43 pm
Use a service like XE.com or Oanda to save a lot of currency conversion fees and wire charges. I've used XE and they charge no fees (unless you really want a wire, which is just $15). Their currency conversion rates are extremely good, especially compared to a traditional bank international transfer.
If you do this again, I'd be curious how XE's rates compare to TransferWise. TransferWise allows you to see the exact amount transferred in real time, so the test would be to set up a transfer with XE and then also make an immediate note of how much you would have paid to do the same transfer with TransferWise.

I started opening an XE account, but then they wanted to call me to talk about my anticipated use and it seemed like way more hassle than it was worth given that other, non XE-affiliated, reviews I'd read indicated it didn't beat TransferWise's rates (I was planning to open the account to test this though). A comparison indicating XE has better rates would be very interesting.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

criticalmass
Posts: 451
Joined: Wed Feb 12, 2014 10:58 pm

Re: best way to receive large sum of money from another country

Post by criticalmass » Fri Jun 15, 2018 7:35 am

fujiters wrote:
Fri Jun 15, 2018 2:39 am
criticalmass wrote:
Thu Jun 14, 2018 3:43 pm
Use a service like XE.com or Oanda to save a lot of currency conversion fees and wire charges. I've used XE and they charge no fees (unless you really want a wire, which is just $15). Their currency conversion rates are extremely good, especially compared to a traditional bank international transfer.
If you do this again, I'd be curious how XE's rates compare to TransferWise. TransferWise allows you to see the exact amount transferred in real time, so the test would be to set up a transfer with XE and then also make an immediate note of how much you would have paid to do the same transfer with TransferWise.

I started opening an XE account, but then they wanted to call me to talk about my anticipated use and it seemed like way more hassle than it was worth given that other, non XE-affiliated, reviews I'd read indicated it didn't beat TransferWise's rates (I was planning to open the account to test this though). A comparison indicating XE has better rates would be very interesting.
With xe, I never needed to do a transfer first to find out what the rate is. They show current rates (real time) or you can select a limit order to get the future rate of your choice. There aren’t any other fees if you use electronic transfer or check. Outgoing Wires have a charge, but they are just $15. I agree that the account opening process can be a small hassle, due to their checks for laundering, terrorist funding, etc. I’ve also gotten quizzed about anticipated use when opening US bank and brokerage accounts in recent years.

msk
Posts: 848
Joined: Mon Aug 15, 2016 10:40 am

Re: best way to receive large sum of money from another country

Post by msk » Fri Jun 15, 2018 8:27 am

Too much attention is being paid to the currency exchange charges compared to daily or monthly variations in the exchange rate itself. I regularly transfer 6 figure sums into CAD. The currency charges amounto a third of one percent or less but the exchange rate can often fluctuate more than a full percent in a week! I suggest for OP: Get parent go to his own bank and ask for best rate to convert CAD 200k. NOT the standard retail rack rate. The cashier would normally have to contact the head office currency trader to get a good rate authorised. Normally I ask for this only for 6 figure amounts. They would not bother for 25k... Parent then transfers the USD to son. Son puts same in his brokerage account and buys EWC. Reinvest dividends from EWC as they get paid. Son fills in IRS forms. Son gets full exposure to Canadian stocks and CAD until he wishes to cash in.

Post Reply