Frequently asked questions about inheritance for Americans abroad
Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.
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Will I pay U.S. income tax just because I receive an inheritance?
Generally, receiving money or property as an inheritance is not treated as income for U.S. federal income tax. Income from those assets, a later sale or certain inherited retirement-account payments can be taxable. Separate reporting may still be required.
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When may I need Form 3520 for a foreign inheritance?
Form 3520 may be required if gifts or inheritances from a nonresident alien individual or foreign estate exceed $100,000 during the tax year. Amounts from related sources may need to be added together. Foreign trusts have separate rules.
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If I inherit less than $100,000, can I ignore the U.S. reporting rules?
No. The $100,000 limit concerns one particular rule for foreign gifts and inheritances. Bank accounts, other financial assets, investment funds and trusts have their own reporting rules.
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Do I report an inherited home abroad on FBAR or Form 8938?
A home you own directly is not itself reported on either form. Receiving it may still raise a Form 3520 question. A home held through a company or trust, rental income and a later sale need separate checks.
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Does paying Dutch inheritance tax complete my U.S. reporting?
No. Dutch inheritance tax and U.S. reporting are separate. You may still need to give the U.S. authorities information about the inheritance or the assets you received, depending on your circumstances.
