Taxes paid in USA for sending money to parents in India
"I'm not certain about international transfers, but that amount is large enough that it could be subject to gift tax. https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes Note that the threshold for this tax is ""per person, per person"". For example, if you gave your father $12,5k, and gave your mother $12.5k, and your wife gave them each the same amounts, each of those gifts is small enough to be within the $14,000 exclusion and you and your wife would owe no gift tax. If you aren't married, you might want to spread this gift over two years to stay under that threshold."
If you are a non resident Indian, the income you earn and transfer to India is tax free in India. You can hold the funds in USD or convert then into INR, there is no tax implication. Buyer A didn't send money to the US government, Buyer A sent money to Seller B, a US resident.  I think the most common way to facilitate a transaction like this is a regular old international wire transfer. Buyer A in India goes to their bank to exchange X INR to $1mm USD.  $1mm USD is then wire transferred to Seller B's bank account.  The USD was sold to Buyer A, either by funds held by Buyer A's bank, or foreign exchange markets, or possibly the US government.     Seller B may owe taxes on the gain derived from the sale of this thing to Buyer A, but that taxation would arise regardless of who the buyer was.  Buyer A may owe an import tax in India upon importing whatever they bought.  I don't think it's common to tax imported money in this sort of transactional setting though. Gifts from your parents are not treated as income for tax purposes. You should not include that in your subsidy calculation. If you are here on a student-visa and have been in the US for less than 5 years, then you are considered a non-resident alien, and you are not required to buy a qualified plan through the insurance marketplace. You might be able to get a cheaper student plan through your school, but the subsidy might be enough that it's still worth it when calculated correctly. If you are a resident-alien or you are a citizen of the US, then you are required to get coverage, though you can choose not to purchase coverage and pay the tax for not having creditable coverage. That tax cannot be collected by the IRS unless you have already had federal tax withheld. They can only confiscate your tax return money to recoup that money. I don't have enough information to recommend one way or the other what you should do, but I would bet that if you recalculated your subsidy without including your parents income it would cover the majority of the cost. You should also consider applying for Medicaid if you meet the eligibility requirements in your state. From an Indian tax point of view, this transaction is not taxable to you or your father. "Assuming you are Non-Resident Indian for tax purposes, this transaction is not taxable. Indian tax law doesn't qualify ""gifts"" as taxable income." Are you actually supporting both your mother and father? Is the account joint? Is your mother aware of the gift and has control over the money same as your father? If you cannot answer (and provide support) yes to all these questions, then I doubt you could make such a claim. If the fact that the bank account is only in your father's name is a mere technicality for whatever reason, and the money is in fact intended, controlled by and benefits both of your parents, then I believe you can. See more details about gift tax in the IRS publication 950. "Context: My parents overseas (Japan) sent me a little over $100,000 to   cover an expensive tuition payment and moderate living expenses in   2014. They are not US residents, Green card holders or citizens. They did not remit the tuition payment directly to the school. I am a   resident (for tax). This is enough to answer yes. That's basically the set of requirements for filing: you received >$100K from a non-US person and you yourself are a US person. You have to report it, and unless it is taxable income - it is a gift. Taxable income is reported on the form 1040, gifts are reported on the form 3520. The fact that in Japan it is not considered a gift is irrelevant. Gift tax laws vary between countries, some (many) don't have gift taxes at all. But the reporting requirement is based on the US law and the US definition of ""gift"". As I said above, if it is not a gift per the US law, then it is taxable income (and then you report all of it regardless of the amount and pay taxes). Had they paid directly to the institution, you wouldn't need to count it as income/gift to you because you didn't actually receive the money (so no income) and it went directly to cover your qualified education expenses (so no gift), but this is not the case in your situation. Whether or not this will be reported by the IRS back to Japan - I don't know, but it was probably already reported to the authorities in Japan by the banks through which the transfers went through. As to whether it will trigger an audit - doesn't really matter. It was, most likely, reported to the IRS already by the receiving banks in the US, so not reporting it on your tax return (either as income or on form 3520) may indeed raise some flags." From India Tax Point of view, your parents can Gift you the money. There is no tax due to this in India for your parents or for you. Transferring the funds out of India is also possible.  Under the Liberalized Remittance Scheme by RBI, one can transfer upto 200,000 USD. Please check with your Bank for the exact paperwork.  Typically PAN and a CA certificate mentioning the relevant clauses and certifying the purpose is required.  Bank may have some more paperwork on its own. You haven't indicated where the funds are held. They should ideally be held in NRO account. If you haven't, have this done ASAP. Once the funds are in NRO account, you can repatriate this outside of India subject to a limit of 1 million USD. A CA certificate is required. Please contact your Indian Bank and they should be able to guide you. There are no tax implications of this in US as much as I know, someone else may post the US tax aspect. No, you can not claim any sort of tax benefit. The main problem is that your parent is not living with you, though even if they were, they would also have to be dependent on you. I cannot find a good definition of 'dependant', but from what I can find, they must have only a trivial amount of income and must rely on you for at least 50% of their living expenses. Useful links include: Note that your parent may (but probably won't) be required to pay taxes on the money you submit to them. I have no experience whatsoever with Indian tax law, just pointing this out as a possibility. "Any inward remittance received by your Parents cannot be treated as ""Income"" as per the definitaion. This can at best be treated as ""Gift"". However in India there is No Gift tax for certain relations and there is no ceiling on the amount. In your case gifting of money by son to father or viceversa is allowed without any limits and tax implication. However if you father were to invest this money in his name and make gains, the gains would be taxable.  However if the Money is being transfered with specific purpose such as to buy a property, etc make sure you have the Bank give your dad an certificate of Inward remittance. This is also advisable even otherwise, the Inwared Remittance certificate from Bank certifies that the credit entry in the account is because or funds comming into India and if the tax authorities were to question the large amount of credits, it would be proof that it is due to Inward remittance and not due to say a sale of property by your dad Helpful Links: http://www.moneycontrol.com/news/tax/gift-tax-whatsa-gift_664238.html http://www.thehindubusinessline.in/bline/blnri/exp-tax.htm Edit 1: What you father does with the money is treated as EXPENSE, ie spends on day to day expense or pays off your Loans or Pay off his loans have no relevance from a Tax Prespective in India.  The only issue comes in say you have transfered the funds to buy a property and there was no purpose of remittance specified by Bank's letter and one want to reptriate this funds back to US, then its an issue. If you transfer the funds directly to your Loan account again there is no tax implication to you in India as you are NRI." "The Option 2 in your answer is how most of the money is moved cross border. It is called International Transfer, most of it carried out using the SWIFT network. This is expensive, at a minimum it costs in the range of USD 30 to USD 50. This becomes a expensive mechanism to transfer small sums of money that individuals are typically looking at.   Over a period of years, the low value payments by individuals between certain pair of countries is quite high, example US-India, US-China, Middle-East-India, US-Mexico etc ... With the intention to reduce cost, Banks have built a different work-flow, this is the Option 1. This essentially works on getting money from multiple individuals in EUR. The aggregated sum is converted into INR, then transferred to partner Bank in India via Single SWIFT. Alongside the partner bank is also sent a file of instructions having the credit account. The Partner Bank in India will use the local clearing network [these days NEFT] to credit the funds to the Indian account.   Option 3: Other methods include you writing a check in EUR and sending it over to a friend/relative in India to deposit this into Indian Account. Typically very nominal costs. Typically one month of timelines. Option 4: Another method would be to visit an Indian Bank and ask them to issue a ""Rupee Draft/Bankers Check"" payable in India. The charges for this would be higher than Option 3, less than Option 1. Mail this to friend/relative in India to deposit this into Indian Account. Typically couple of days timelines for transfer to happen." I wouldn't send it to India in the first place because their financial system is a bit sketchy, I would look into countries like Germany to send the money to you if you're looking to avoid high taxes with a very stable financial system Taxability does not depending on transfer of money to NRO. It depending on your tax status in India. Assuming you have spent more than 182 days outside India for the financial year 1 April 2015 to 31 March 2016, you would be NRI. I am transferring money from my Maldives saving account to my Indian Saving account(NRO). Will it be taxable in India? Assuming you are NRI, this is not taxable. Any interest in NRO account is taxable in India. Again I am transferring the money from my Indian savings account to my dad's Indian saving account. Will it be taxable? This is not taxable to you. To your father it would be treated as Gift. As per Gift tax, this is not taxable to your father as well. If the amount is large, keep proper documentation of the transaction. Any income that is generated i.e. interest etc on this amount will be taxable to your father. You won't be paying any taxes for income generated in the US as long as you are not-resident in India. You pay US taxes. You can file a null return in India just in case (all zeroes). If you have any income in India - bank deposits in your name, house rental income and so on - that needs to be declared and tax needs to be paid in India.