Get to know the authorWhether you’re transferring foreign earnings to a US bank account, financially supporting your family in another country, or purchasing property overseas, life as an expat often involves transferring large sums of money internationally.
Despite how common it is to move large sums of money internationally, doing so can trigger additional reporting obligations or incur expensive transfer fees. In fact, the average transfer fee is about 6% of the amount transferred.1
Below, we’ll go over some of the most important details about transferring large sums of money overseas, from the most cost-efficient approach to typical fees, tax implications, and more.
Is it legal to send money overseas?
Did you know that nearly $5 trillion USD is transferred internationally each day?2 If not, you can breathe a little easier while reviewing a commonly asked question about sending money internationally: “Is it legal to send money abroad?”
The answer, for the most part, is a resounding “Yes!” (As long as the mechanisms through which you do so do not commit a crime, such as money laundering.3)
Another common question is, “Are there rules for transferring large sums of money internationally?” In this case, the answer can vary depending on the country. For example, some countries may have rules or regulations about how much you can send, how often you can send, or whether you must report such transfers. Always take care to review the cross-border rules in the country from which you are sending the money with the country to where you are sending the money.
Considerations when sending large sums of money overseas
Before deciding how you want to send a large sum of money overseas, consider the following.
Fees & exchange rates
Exchange rates will vary depending on the currencies you are converting from or to, as well as which transfer method you use. Because these rates fluctuate on a day-to-day basis, you may get a much more favorable rate one day than the other. Some services may guarantee locked exchange rates for a certain period, such as 24-72 hours. In addition to exchange rates, some services also charge processing fees.
Pro tip:
Some international transfer services offer the ability to pay via credit card — but many times, this will trigger a steep cash advance fee. To be safe, you may want to pay through a debit card or direct account transfer.
Country
Depending on where you’re transferring money from and to, you may encounter different:
- Transfer method availability and preferences
- For example, when transferring large sums of money to the UK, you may want to confirm that your transfer method is covered by the British Financial Conduct Authority
- Required documents & information
- Transfer limits
- For example, India limits transfers to the US at $264,104 USD per resident per fiscal year
- Tax and/or reporting obligations
Security
Certain methods of transferring funds (e.g. bank transfers, transfer services) are much more secure than other ways (e.g. mailing a check or cash). Even with the more secure services, however, it’s possible to enter recipients’ information wrong, encounter scams, or have personally identifying information compromised — so do your due diligence beforehand.
Technology
Some international transfer methods, like cryptocurrency transfers, will require more technological know-how than others.
Speed
Depending on the service you use, transfers may be sent instantly or could take several days (or, in the case of snail mail, weeks) to arrive.
Documentation required
Transferring funds via bank may require you to provide documents to verify your identity, which can add an extra obstacle to the process.
Customer support
Some international transfer methods may offer built-in customer support — but even then, some may offer better levels of support than others. For particularly large amounts of money, it’s a good idea to research the reputation your desired transfer method has for customer service.
Purpose: Is it a gift?
Certain types of transactions may incur additional fees or tax and/or reporting obligations.
Many services, for example, place additional fees on business payments. Transferring large sums of money to family internationally, on the other hand, may trigger the gift tax (more on that in a bit).
Ways to transfer large sums of money internationally
There are a couple of primary ways of making large international transfers: international bank transfers, and via international money transfer services. Each of these options has its own distinct timeline, requirements, and associated fees. While international bank transfers are the more traditional method, that doesn’t necessarily mean that it’s the best option for you. Below, we break down these two options in more detail so that you can help yourself determine the right method for you.
International bank transfer
Transferring large sums of money between bank accounts internationally usually involves a wire transfer (aka an electronic funds transfer) administered by the bank itself. To complete a wire transfer, you must typically:4
- Navigate to your bank’s wire transfer section
- Specify how much you want to send, when, and why
- Enter your recipient’s information, including their:
- Name & address
- Name & address of their bank
- Bank account number and type (e.g. checking, savings)
- Bank routing number
- SWIFT or BIC code, if applicable
- Confirm the details
- Accept the fees, terms, and conditions
- Authorize and complete the transfer
Pro tip:
It’s often difficult or impossible to cancel a bank transfer once it’s been initiated, so make sure you’ve got your recipients’ details right.
Some financial institutions may charge a flat fee for international wire transfers (at an average of $44 USD5), while others charge a percentage of the amount sent. Keep in mind that if you’re converting the money into another currency, an exchange rate will apply. Funds may take up to five days to transfer.6
Although most US banks allow account holders to make international wire transfers, some offer quicker, cheaper, or more reputable wire transfer services than others. A few of the best US banks for making international transfers include:7
- Bank of America
- Chase
- Citibank
- PNC Bank
- US Bank
- Wells Fargo
International money transfer services
The other main way of transferring money overseas is through an online money or wire transfer service. These are third-party sites or apps that facilitate transfers between accounts. Many expats choose these services because they are quicker and cheaper than completing a wire transfer through their bank. A couple of the more well-known international money transfer service options include:
Formerly known as Transferwise, Wise supports money transfers in 40 currencies to over 80 countries. Most tranfers are completed in less than 24 hours, with longer transfers taking up to two days. In some cases, transfers occur instantly. The exchange rates are executed at mid-market rates, and fees vary by currency, but may be as low as 0.43%.
A more bespoke option, Clear Currency supports transfers in 35 currencies to over 130 countries. Transfers typically take place same-day, but some take up to three working days. Exchange rates vary by country and there is no transfer fee. Additionally, a dedicated account manager is assigned to each member.
Other services include Revolut, Western Union, Xe, CurrencyFair, WorldRemit, OFX, MoneyGram, Ria, and others.
Pro tip:
Even if you choose to use an international money service when transferring funds, it may be a good idea to maintain a US bank account. Doing so can help you maintain your US credit score, pay US-based bills, reduce domestic transfer funds, and more. (8)
Other methods of transferring large sums of money overseas
A few more ways to transfer large amounts of money internationally include:
- Mailing a check or cash
- Cryptocurrency transfers
- Money orders
Transferring large sums of money to the US: Tax implications
The US’s citizenship-based taxation system means that even if you move to another country, you’re still subject to taxation. And if you’re sending and receiving large amounts of money internationally, that may have implications for your US tax and reporting obligations.
Foreign Bank Account Report (FBAR)
If the international transfers you make to the US come from a foreign financial account containing $10,000 USD or more at any point in the year, you must file an FBAR.
The Foreign Account Tax Compliance Act (FATCA)
On a similar note, anyone with over $200,000 USD in foreign financial assets by the end of the year — or over $300,000 USD in foreign assets at any point during the year — must report them on Form 8938 per FATCA.
Gift Tax Return (Form 709)
If the international transfers you make include gifts of more than $17,000 USD to any one recipient during the 2023 tax year, you will be subject to filing a gift tax return. Note that there is an exception here if the person in question is your foreign spouse, in which case, the limit jumps to $175,000 USD.
References
- International Bank Transfer Fees: All Costs Revealed [2023]
- Explaining the history of how money is transferred internationally
- International Money Transfers: What You Should Know Before Sending Money
- The Total Guide to International Wire Transfers
- How much are wire transfer fees?
- How Long Does a Wire Transfer Take?
- 6 Best Banks for International Money Transfers and Alternatives [2023]
- Keeping an American bank account when you move abroad
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