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The New 1% Remittance Tax: Sending Money Home From Queens

What the federal tax on money transfers means for families in Jamaica, Queens and across the borough who send money to Bangladesh and other countries.

Published October 4, 2026 by Hillside Accounting Services

In short: Since January 1, 2026, a 1% federal excise tax applies to money transfers abroad that you pay for with cash, a money order, a cashier's check or a similar paper instrument. The transfer company collects it when you send. Transfers paid from an account at a U.S. bank or credit union, or with a U.S.-issued debit or credit card, are exempt, so paying from an account avoids the tax.

Which Transfers Are Taxed

  • Cash handed over at a money transfer counter
  • Money orders and cashier's checks
  • Traveler's checks, under the proposed rules

Watch for one trap: if the transfer company cashes a check for you and then sends the cash, the transfer counts as cash-funded and is taxed.

How to Send Money Without Paying the 1% Tax

  • Pay with money taken from your account at a U.S.-regulated bank, credit union or other financial institution.
  • Pay with a U.S.-issued debit or credit card. Under the proposed rules, cards issued anywhere, general-use prepaid cards and personal checks also don't trigger the tax, subject to an anti-avoidance rule.
  • Transfers of $15 or less aren't taxed under the proposed rules.

If you don't have a bank account, this is one more reason to open a low-cost one: refunds from the IRS now go to bank accounts too.

How Much Is It?

The tax is 1% of the amount delivered to the person you're sending to, including any promotional bonus. Transfer fees and state taxes aren't counted. On a $500 cash transfer, that's $5.

Who Pays and Who Collects

The sender owes the tax, but the transfer company collects it at the counter, deposits it twice a month and reports it to the IRS on Form 720. If a transfer is canceled or expires and the company didn't refund the tax, the sender can claim it back from the IRS on Form 8849, Schedule 6.

The Rules Are Still Proposed

The tax itself is law, but Treasury and the IRS have issued only proposed regulations (published April 13, 2026; comments closed June 12, 2026). Senders and transfer companies may rely on them until final rules apply, and the IRS has extended penalty relief for transfer companies until then (Notice 2026-52, September 2026). We'll update this post when final rules are published.

Money Sent Home and Your Tax Return

Money you send to family abroad isn't deductible. Gifts of more than $19,000 to one person in 2026 may need a gift tax return (Form 709), although tax is rarely owed. Going the other way, gifts or inheritances from a person abroad that total more than $100,000 in a year are reported on Form 3520. And if your accounts outside the United States, including accounts in Bangladesh, added up to more than $10,000 at any time during the year, you file an FBAR.

How We Help

When we prepare your return, we go over money you sent or received from abroad, report gifts and foreign accounts correctly, and explain each item in English or Bangla. Call (646) 403-6500 or visit 167-13 Hillside Ave, 2nd Floor, Jamaica, Queens, NY 11432. Families with income or property in Bangladesh can read more on our Bangla tax help page.

বাংলায় সংক্ষেপে

১ জানুয়ারি ২০২৬ থেকে নগদ টাকা, মানি অর্ডার বা ক্যাশিয়ার্স চেক দিয়ে বিদেশে টাকা পাঠালে পাঠানো অর্থের ওপর ১% ফেডারেল ট্যাক্স লাগে। টাকা পাঠানোর প্রতিষ্ঠান কাউন্টারেই এটা কেটে নেয়; যেমন ৫০০ ডলার নগদে পাঠালে ৫ ডলার। ব্যাংক বা ক্রেডিট ইউনিয়নের অ্যাকাউন্ট থেকে, অথবা যুক্তরাষ্ট্রে ইস্যু করা ডেবিট বা ক্রেডিট কার্ড দিয়ে পাঠালে এই ট্যাক্স লাগে না। নিয়মগুলো এখনো প্রস্তাবিত অবস্থায় আছে; চূড়ান্ত হলে আমরা এই লেখা আপডেট করব।

Sources

Checked September 29 and October 4, 2026.