In looking over laws concerning gift taxes I was surprised to see the person making the gift gets stuck with the taxes on the gift. This sort of strikes me as odd, but hey.
What would happen if the person making the gift does not live in the U.S., but the recipient does?
For someone filing a U.S. income tax return, a gift is never considered “income” upon which taxes must be paid, regardless of its source. If the person making the gift is not subject to U.S. taxation, he or she obviously doesn’t have to pay a gift tax.
If you want to know more about gift taxes, the IRS has a publication that covers the subject. Since only gifts valued at more than $11,000 (in a given year, to a single person) are subject to the tax (more, in some cases), most of us never have to deal with it, so it remains a bit of a mystery! It’s closely connected to estate taxes, I suppose on the theory that making a large gift is like passing along some of your estate, but doing it before you die, instead of after.
I believe the government’s goal here is to preclude having the situation where someone effectively evades paying inheritance taxes by “giving” his estate to his heirs just before dying.