The Indian Mutual Fund SIP that built wealth for you when you lived in India... can quietly destroy

[00:00:00]There's a quiet financial nightmare unfolding for hundreds of Indian families where parents in India are gifting money to their children in the US and the kids are now facing penalties of up to 25% of the gift amount. Well, let me break this down. You see, under the Liberalised Remittance Scheme, each Indian parent can send up to $250,000 per financial year to their child in the US. So, together, both parents can practically gift $500,000 in a year. And on the India side, this is absolutely tax-free since gifts from parents to children are exempt under Section 56.

[00:00:31]But, here's where it gets dangerous. The moment a US resident receives more than $100,000 in a calendar year as a gift from a foreign person, they must file Form 3520 with the IRS by 15th of April. Now, the gift itself is not taxable in the US, but missing this filing attracts a penalty of 5% per month capped at 25% of the gift amount. Dot. But, here's the point you must remember. The statute of limitations on Form 3520 does not even start running until you file it, which means an unfiled form from 5 years ago is still a live liability today. And the IRS is now cracking down on this. Now, if you've received such a gift, please consult a US-based CPA immediately and share it with someone who needs to hear this.