Two different issues---



1. Gift tax



If you gave your parents money( The simple way is to write each parent a
check...), the amount you gave to EACH parent should under the annual limit
($12K in 2007) . Otherwise you must report the total gifts to IRS and you might
have to pay tax on the gifts.

Please note: You don't need to report the gift to IRS
when your gift is under the annual limit. Nor don’t you have any income tax
benefit("deduction") on the gift amount...

( 通常annual gift tax exemption 多用来做estate
planning的...)



The person who receives your gift doesn’t need report the gift to IRS or pay
gift or income tax on its value in US... ( <--- A gift..)  I don't know
about the tax treatment in .




2. Claim an exemption for a dependent in the income tax return

In your case, you would like to claim them as
dependents. General speaking, in order to claim a dependent, it requires 5
tests( ALL MET)

• Income
  test --- the dependent must receive less than a certain amount in
  gross  income. ( check Publication 17 every year for the amount
  limitation.)
• Support
  test --- the dependent must receive over half of the support from the
  taxpayer. (again, there is a chart in Publication 17 for you to calculate
  if the support test is met.)
• Joint
  return test --- the dependent must not file a joint return...
• Citizen/resident
  test--- the dependent  has to be a
  citizen/resident,  or a resident of
  or ..
  
• Member
  of household or Relationship test---  usually the dependent must live
  with you all year. But there is a list of relatives who don't have to live
  with you and you can claim them as dependents. Your parents fall into this
  list....

Please go to IRS and download Publication 17 ,

Part One  The Income Tax Return ---> section 3
" personal exemption and dependents" 

Last, 当你遇到任何federal income tax  问题,
我建议你每年到IRS 下载publication 17...很多正确的答案都这里开始...

[此贴子已经被作者于2007-5-2 18:55:56编辑过]

found two topics relate to your question:

How does the citizenship test affect whether someone qualifies as a dependent on my tax return?

To claim a dependent, you must meet five requirements. One of those requirements is the citizenship test, which requires that the dependent be a U.S. citizen or national, or a resident alien of the U.S., Canada or Mexico, for some part of the year.

If you are a U.S. citizen and you legally adopt a non-U.S. child who lives with you the entire year, the child qualifies as a citizen for this test.

Can I claim my elderly mother as a dependent on my income tax return, since I provide her with financial support?

If you supply a parent with financial support, you may be able to claim your mom or dad as a dependent on your income tax return and qualify for the same exemption you get for each of your own kids. However, both of the following must be true:

• His or her gross income must be less than $3,300 ($3,400 in 2007.)

• You provide more than one-half of the parent’s support for the year. Exceptions to this rule are made for "multiple-support" arrangements among siblings.

• You parent does not file a joint income tax return with someone else.

• Your parent is a U.S. citizen or resident of the U.S., Canada or Mexico.

The most difficult requirement to meet is usually the income test. To meet that requirement, you might be able to shift around your parent’s assets or make some other arrangement to get his or her income below the cap. Of course, that’s not a good idea if it would create a hardship or if it would simply force you to pay much more to meet the parent’s monthly living expenses.

so, from the above discussion, you sure can claim your parents who will be moving to canada.  in terms of sending money to them, you may incur the gift tax as some people have mentioned from above threads already.  it's a similar situation where you give the money to your kids as gift.

It should be Publication 501 Exemptions, Standard Deduction, and Filing Information...

Anyways, 懂得到IRS查Publication, 值得赞许... :-)

As to gift tax, there are some tricks you can use to give your parents more than the annual limit... like, you can give someone who you trust the money, then ask this person to write the check to the "final" recipient... But I don't really want to confuse you now...  

Normally, 这些方法都是为了get rid
of some cash every year... .. Sometimes when the asset size is big, the
estate planning is important. Otherwise it will become a burden to people
who inherit the property. (I've seen a family lost most of the valuable land so
that they can come up the estate tax. Their leftover was the barren piece on the
mountains... That's another subject... )

高人在这里啊，顺便问下，如果是父母从中国给我们的gift，按这个说法我们不用为此交gift tax了？理论上，两个人的话可以从双方父母那里得到12k*2*2 = 48k/year?

thanks so much!

gift tax是给的人交，不是收的人交，而且税率很高。