Will I be taxed for the money wire from foreign country to my bank account?

Question

My friend liveing in foregn country needs my help to purchase computer equipments for him. And he will wire/transfer money to my bank accout for the cost.
I am wondering if this money will be treated as gift or income and therefore being taxed? Or any maxium $$ can be wired without being taxed?

Answer 1

The money you receive will not be income to you as long as you use it to purchase equipment for another person. If you are paid anything for providing this service, that amount will be income.



The money also is not a gift to you, because you must spend it on behalf of the person who sent it to you.



Therefore, unless you are allowed to keep some of the money, you will not receive income or a gift in this transaction.



A couple of other thoughts:



* Don't confuse what has to be reported to the IRS or Treasury Department with what is taxable income. There are minimums for reporting purposes, but any amount that you receive for services is taxable income.



* Don't assume that any international wire transfer is under the radar these days.



* If you will be shipping computer equipment out of the country, be sure you comply with any restrictions there may be on exporting certain kinds of equipment.



You should confirm this advice with a professional advisor.

Answer 2

It's not a gift OR income therefore NOT taxed. It's just as if he was standing right next to you and handing you money to make purchases for him.



Wire transfers usually have a BANK fee attached to it though. I believe about 3%.

Answer 3

It is certainly not income. If you are buying the equipment for him then it's not a gift either so no tax should apply.



I am not a tax professional, however. if it is a lot of $ then consult one.

Answer 4

yes, there is a limit. i'm not sure what the amount is though. if its for a computer, then i'm guessing it will be under the limit (i think it's $10K per year).



I thinkyou're fine, but be careful, as you won't automatically be taxed by your bank. RATHER, you will be responsible for reporting the amount to the IRS during tax season.



good luck!