How to deal with tricky taxes when sending money to loved ones and businesses in China.
How China regulates large remittances
When sending money to China, you could be concerned about potential gift taxes. The good news: China is one of the few countries that doesn’t levy an inheritance or gift tax on cash sent into the country.
However, the result of a relaxed socialist economy, China announced in 2017 that it’s considering imposing inheritance and gift taxes in the next few years. We’ll update this space as details trickle in.
Do I have to report large transfers out of the US?
Nearly 20 years after 9/11, the government still pays a lot of attention to money that enters and leaves the US. Which means that if you fail to report a large money transfer to China, it will likely be discovered.
By law, banks report cash transactions of $10,000 or more into and out of the country — and they’ll flag any transaction that raises an eyebrow. Independent money transfer companies are sometimes held to reporting thresholds as low as $1,000.
Sending a lot of money out of the country? Know what the IRS expects of you.
How will my recipient receive my remittance in China?
The process of receiving a money transfer in China depends largely on your provider and how you’ve marked it for delivery. Your recipient may need to provide government-issued photo ID or a transaction confirmation number to receive your funds.
If they own an account with a Chinese bank or money transfer company, they may not be required to provide this information each time you send money.
As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.