Gifting the Spouse

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Gifting is a little complicated, with two tax regimes and international transfers.  But this is what I think I understand so far.

 

Thailand:  Gifts may be taxable events for both parties.  A spouse may receive up to 20 million baht as a gift every year free of tax.  Excess is levied a gift tax of 5%.  There doesn't seem to be a filing requirement unless tax is due, but I'm not certain of that.

 

The donor can gift funds from within Thailand with no tax implications to self.  Funds sent from outside of Thailand are remittances, and are subject to the standard tax regulations.  Irrelevant if the purpose is a gift.  Two separate events.  Tax on the remitted funds is based on assessability and donor's TEDA, with excess taxed as personal income at rates up to 35%.  No tax is levied on the donor for giving the gift.

 

USA:  Receiving the gift within exclusion limits is tax-free for the donee.  Any gift tax is paid by the donor.  Gifts to spouses are generally tax-free, up to a lifetime limit of $13,600,000.  Gifts to foreign spouses is capped at an annual tax-free limit of $185,000.  IRS Form 709 is used to declare and pay gift tax.  Form is not filed if no tax due.  A null filing might be useful as documentation for future Thai filing questions.

 

The solution would seem to be setting up an individual brokerage account in the spouses name outside of Thailand.

 

Let's say I gift my wife 1 million baht annually, currently about US$29,000.  I sell funds in MY individual account and pay the capital gains taxes if any, and transfer $29K into her individual account as a gift.

 

There is no US gift tax, as I am under the $185K annual threshold.  She has cash in her account without worrying about cost basis had I transferred shares previously owned.   Form 709 is not required, but a null form may be filed for documentary purposes.

 

There is no Thai income tax for me, as no money has been remitted into Thailand.

 

There is no Thai gift tax for the spouse, as we are under the 20 million baht annual limit.

 

I can do this every year, and when I eventually expire, she will have more than enough funds to live on until the IRS provides the Transfer Certification, which can take up to a year.

 

She should be able to remit the funds herself at any time, either by SWIFT or wise, as non-assessable prior gifts.

 

She can keep the funds indefinitely in her US-based individual brokerage account, we will invest in ETF's and start earning more than the pitiful 1.5% she could get if brought in to Thailand.  That will require a W8-BEN withholding form for the brokerage, and she'll also have to start filing US tax returns.  If she can get an ITIN, I'll have the option of filing Married filing Joint.  Or perhaps keep it simple, and she can file herself to keep her gifted funds separate from mine.

 

Any comments, constructive or otherwise?