Sending money abroad is common in different parts of the world but it is primarily the norm is developed countries that have many foreign workers. In the United States, for example, billions of dollars are sent out to African, Latin American, and Caribbean countries yearly. In 2018, according to the World Bank, more than $529 billion was sent from the United States to low- and average-income countries, with the ones above taking the lead. Immigrants and foreign workers move to developed countries in search of better lives and send money home to their loved ones. However, these aren’t the only people who send money abroad. Some shady businesses and individuals send money abroad to evade taxes, or launder cash. It is because of these illegal activities that a lot of rules exist to guide sending money overseas. The amount of money a person can send at a given time is limited and sending an incredibly large sum of money might lead to suspicion from the IRS.
How Much Money Can You Send Abroad?
The amount of money you can send yearly varies the purpose of the transaction. Individuals who want to send cash as gifts to family and friends have the lowest limit and the money they send will be tax-free. The limit also depends on the destination. Yearly, an individual can send only $14,000 from the United States to India without paying taxes on the amount sent. Any money sent out of the $14,000 cap will attract taxes from the sender. The good news is that no income tax deduction will be done so the receiver will get the exact amount you send. If you are sending money for the sale of a property or any other business transaction, the case will be different. These transactions are usually more complex. All payments must be done through legal banking channels and proper documentation must be kept as proof. All taxes must be paid before the transaction is approved and the cost for making these transactions is usually higher than the cost for making gift payments across platforms. The limit for business transactions is up to $250,000.
There are different online remittance institutions you can use when making cross border transfers and each one comes with unique rules but they all comply with the IRS. Some of these services even allow people to make large cash deposits to foreign countries. For example, if you want to send $250,000 from the United States to Nigeria, you can make arrangements with these remittance companies to deliver the cash to the receiver. This doorstep delivery method is great for avoiding unnecessary attention from the IRS. Sending money, especially large amounts of money through wire transfer can raise red flags and prompt an audit from the IRS. So, it is always better to use a remittance company. However, you need to be careful with the company you chose since there are so many fraudulent companies out there that take advantage of people looking for a cheap and fast way to send money to their loved ones. If you are not careful, you will lose your money and still be under investigation by the IRS.
Most Reliable Ways to Send Money from the United States
PayPal
One of the easiest ways to send money from your account to a loved one or client is through PayPal. It also happens to be one of the cheapest options out there. As long as the receiver has a PayPal account, transfers can be done quickly for free. The only charges required will be paid when the receiver is trying to transfer the funds from PayPal to their debit or credit card. The cost usually depends on the amount of money you are trying to send. For all international transactions above $3000, you will need to pay about 3.9% and then $0.30. you also need to consider the exchange rate at the time of the transfer. The larger the transactions, the lower the fees. The limit for international PayPal transfers is $10,000 for individuals with unverified accounts. Verified PayPal accounts have no fixed yearly limits but they may be limited to $60,000 per daily P2P transactions. All you need to complete the transaction is PayPal but what happens when the receiver is prohibited from using PayPal to collect funds?
Western Union
Western Union is one of the most popular methods of sending money across the border and it is approved in more than 200 countries across the globe. Sending money through this medium is a little more complicated than sending money through PayPal. It isn’t as electronic as PayPal but it is as reliable. All you have to do is visit one of their offices, fill out the form, and give them the money you wish to send. The form usually includes the name of the sender, the location, and the amount. You will receive a control number right after you pay the money and the fees and you will have to give that control number to the receiver. Without presenting the number the receiver will be unable to cash out the funds. The fees for sending money through Western Union is relatively high when compared to PayPal. For smaller transactions, you will pay up to 10% of the money you are trying to send as fees when you want a rapid transfer. The percentage reduces when you want a next day transfer. The fees increase progressively but eventually reduces when the amount you are trying to send is extremely large. Limits depend on the country and the type of transaction.
TransferWise
TransferWise is another great cross border remittance firm. It allows the receiver to get the money sent directly into their bank accounts in their local currency. Neither you nor the receiver needs to visit the bank to complete the transfer. Their fees are also more competitive than Western Union fees and you can send money across several countries. All transfers in the USD and Philippine Peso cost 1% of the total amount. Transfers in other currencies cost 0.5%. Irrespective of the sending currency, the receiver will get the local currency equivalent into their bank account. The limit for transactions on this app is as high as $1 million per transaction. However, most banks in the united states set individual daily limits at $5000 so this might affect the process when you want to make large transfers.
What to Look Out for When Choosing a Service
The digital age has a lot of benefits but it also comes with its disadvantages. There is so much information online and those who aren’t careful fall prey to cybercrime. When it comes to sending money online, you need to proceed with extra caution. One wrong move might cost you your life savings and you might even be in trouble with the law. So, how do you know when a website is legitimate? First things first, conduct research. The user interface, website speed, design, and content might be good markers for identifying a scam website but scammers have become more resource when it comes to website development. This is why you need a deep web search to get the truth about a website. Most of these scammers pay for fake reviews and testimonials. Read between the lines to know when information is true. It is important that you only send money through a reputable and licensed company like the ones listed above. This way, you can report them if anything goes wrong. Search for the contact details of the firm and reach out to them. If you notice anything shady, look for another website. If you intend to send an incredibly large amount of money, we recommend that you visit the physical location of the remittance firm. Research isn’t easy when it comes to choosing the right remittance firm in the United States but it is always worth the time and energy.
Bottom line
Sending money from place to place in this digital era is much easier than it used to be but this doesn’t mean it is risk-free. Try as much as possible to protect yourself when you are sending money overseas and make sure you don’t reveal sensitive information to anyone.
