Gifts to a Non-U.S. Citizen Spouse Increases
Many married couples assume they can transfer unlimited amounts of money or property to each other without worrying about gift taxes.
While that's generally true when both spouses are U.S. citizens, the rules are different when one spouse is not a U.S. citizen.
Why Is There a Different Rule?
Normally, gifts between spouses qualify for the unlimited marital deduction. However, that unlimited deduction does not apply if the recipient spouse is not a U.S. citizen because assets could leave the U.S. transfer tax system. For 2026, the IRS has increased the annual tax-free gift limit for gifts to a non-U.S. citizen spouse to $194,000, up from $190,000 in 2025.
What Does the $194,000 Limit Mean?
You may give up to $194,000 to a non-U.S. citizen spouse during 2026 without creating a taxable gift. Larger gifts generally require Form 709 and reduce your lifetime exemption rather than immediately creating gift tax.
Examples
Example 1: A $150,000 gift is fully covered by the annual exclusion.
Example 2: A $250,000 gift leaves $56,000 that generally uses part of the lifetime exemption and requires Form 709.
Estate Planning Opportunities
Making annual gifts within the exclusion can gradually transfer wealth while reducing future estate tax exposure. International families should coordinate gift, estate, and immigration planning.
Don't Confuse This With the Regular Gift Exclusion
For 2026:
- Annual gift exclusion to most individuals: $19,000
- Annual gift exclusion to a non-U.S. citizen spouse: $194,000
Bottom Line
If your spouse is not a U.S. citizen, don't assume the unlimited marital deduction applies. The higher 2026 exclusion provides additional planning opportunities, but larger gifts should be reviewed with a qualified tax advisor.
Questions about international tax planning or gift tax reporting? Contact GurelCPA to discuss your situation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.