![]() Most people think of an inheritance tax as being any tax that is levied on an estate of a deceased person. ![]() This article will explain the basics of the Federal Estate and Gift Tax, including the exemptions and the tax rate. Photo courtesy of and copyright Free Range Stock, be you concerned about a federal inheritance tax as part of your estate plan? This article was originally posted on July 25, 2011, and updated on May 8, 2023. If you have specific questions about how to report a gift or inheritance, seek the guidance of a tax professional or an attorney with expertise in international tax matters to ensure that you comply with all relevant laws and regulations for your unique situation. You will not have to pay taxes on an inheritance you receive from a foreign relative, but you have a responsibility to report a gift or inheritance in certain situations. This is not a form you file with your tax return. You can file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. If you are a citizen, green card holder or resident alien with a financial interest in or signature authority over a bank account outside the United States with a balance that exceeded $10,000 at any time during the calendar year, you must file a Report of Foreign Bank and Financial Accounts (FBAR). Do I Need to Report an Inheritance If I Keep the Money in a Foreign Bank Account? If you do not file Form 3520 accurately or on time, you may be subject to penalties equal to 5% of the gift or bequest for each month during which the failure continues, up to a maximum of 25%.įor more information, visit the IRS’s website by clicking here. The form is generally due on April 15 of the year in which you receive your gift. If you receive a gift or inheritance that exceeds these $100,000, the tax laws require you to file Form 3520 at the same time as your tax return for the year you received the gift. You are required to report any foreign inheritance you may receive, not only cash gifts. What Types of Gifts or Inheritance to Report to the IRS? For example, if you receive a gift of $70,000 from your mom and $70,000 from your dad, who are Mexican citizens living in Mexico, you must report the gift because the combined gift totals more than $100,000. You must combine gifts from related parties. What if your parents abroad want to give you a monetary gift of over $100,000, but you don’t want to be burdened by the reporting requirements? Can you simply get each of them to make a gift less than $100,000 so you don’t have to report?
0 Comments
Leave a Reply. |