Do I need to pay US income tax on foreign (UK) earned income?

If I was gifted £100,000, would I need to pay both capital gains tax as well as income tax?

• I am having a hard time understanding capital gains tax. If was given £100,000 would I have to pay both income tax as well as capital gains tax? Like it is above £10,000 so I have to pay capital gains tax but it is also above £5000 so I would have to pay income tax? It is above £40,000 so I would have to pay higher range? I mean how much would I get?

• Answer:

  A gift of £100,000 in cash is not subject to any tax - you will get £100,000. Capital gains tax is only charged on the growth in value of an asset (not cash) from the time you get it until the time you sell it or give it away. It is an alternative to income tax - nothing is subject to both taxes. The only time you might not get the full £100,000 is if the gift comes under a deceased person's Will, when there might be inheritance tax to be paid out of it. That depends on the terms of the Will and the total value of the deceased person's assets.