Do I have to pay taxes on my inheritance from an overseas trust?
No. However, if it's more than $100,000, you'll have to report it. Report the inheritance on Form 3520: Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Enter your information in part IV of the form. If the gift is from an expatriate, special rules might apply.
You must also report all distributions of cash or property received in a calendar year from a foreign trust on Form 3520. The deadline for filing is the same as your federal return -- including any properly filed extensions. Send the form to the same IRS service center address as your federal return.
If you keep your inheritance in a foreign account, you might have a reporting requirement for the account. You must report the account each year if both of these apply:
You have a financial interest in or authority over any financial accounts.
The financial accounts are in a foreign country.
The aggregate value of the foreign accounts is more than $10,000 at any time in the year.
To report the accounts, file Form TD F 90-22.1. Mail it to:
Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
You must file Form TD F 90-22.1: Report of Foreign Bank and Foreign Accounts no later than June 30 of the year following the calendar year you report the required information to the U.S. Dept. of Treasury.
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This advice is for general information purposes only and may not apply to you. Every tax situation is different. This is not intended to be legal advice. Taxpayers should consult an H&R Block Tax Professional regarding their individual tax situation.