The following question was posted on an online forum for Swiss
citizens. What do the tax experts here have to say?
Thanks.
***quote***
I am Swiss, but a US resident. My father passed away end of
October 2022 and I inherited some assets in Switzerland (jointly
with my siblings). We are just now, in February 2023, finalizing
the inheritance inventory and the sealing of the inheritance.
My question is, with regards to reporting the inheritance to the
IRS in the US, do I report the receipt of the inheritance for the
year 2022, because I automatically became a joint owner of the
inheritance immediately on my father's death, even though the
inheritance was not sealed and I could still reject it, and I
could not dispose of the assets yet - or do I only report the
receipt of the inheritance for the year 2023 once the inheritance
has been sealed, when I can actually control the assets?
***unquote***
"tb" <nos...@example.invalid> wrote:
The following question was posted on an online forum for Swiss
citizens. What do the tax experts here have to say?
Thanks.
***quote***
I am Swiss, but a US resident. My father passed away end of
October 2022 and I inherited some assets in Switzerland (jointly
with my siblings). We are just now, in February 2023, finalizing
the inheritance inventory and the sealing of the inheritance.
My question is, with regards to reporting the inheritance to theInheritances are not normally subject to income tax in the US. And
IRS in the US, do I report the receipt of the inheritance for the
year 2022, because I automatically became a joint owner of the
inheritance immediately on my father's death, even though the
inheritance was not sealed and I could still reject it, and I
could not dispose of the assets yet - or do I only report the
receipt of the inheritance for the year 2023 once the inheritance
has been sealed, when I can actually control the assets?
***unquote***
there is no estate tax in the US when the decedent is neither a US
citizen nor has assets in the US.
What does matter is how large the gift is, and where it is kept. If
the gift to a US citizen from abroad exceeds $100,000, then IRS Form
3520 is required to report the transaction. This is not a tax form -
no tax is due. It is a reporting requirement only.
In addition to that, if a US citizen or permanent resident had any
"financial assets" that, in the aggregate, exceeded $10,000 at any
time during the year, they are also required to file a Report of
Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114.
And yes, if your father died in 2022, you report for 2022 because
that is when you became the legal owner (even though it wasn't
actually under your control at that time).
--
Stu
http://DownToEarthLawyer.com
Stuart O. Bronstein wrote:
"tb" <nos...@example.invalid> wrote:I don't profess to be an expert on this subject, but I believe
The following question was posted on an online forum for SwissInheritances are not normally subject to income tax in the US.
citizens. What do the tax experts here have to say?
Thanks.
***quote***
I am Swiss, but a US resident. My father passed away end of
October 2022 and I inherited some assets in Switzerland
(jointly with my siblings). We are just now, in February 2023,
finalizing the inheritance inventory and the sealing of the
inheritance.
My question is, with regards to reporting the inheritance to
the IRS in the US, do I report the receipt of the inheritance
for the year 2022, because I automatically became a joint owner
of the inheritance immediately on my father's death, even
though the inheritance was not sealed and I could still reject
it, and I could not dispose of the assets yet - or do I only
report the receipt of the inheritance for the year 2023 once
the inheritance has been sealed, when I can actually control
the assets? ***unquote***
And there is no estate tax in the US when the decedent is neither
a US citizen nor has assets in the US.
What does matter is how large the gift is, and where it is kept.
If the gift to a US citizen from abroad exceeds $100,000, then
IRS Form 3520 is required to report the transaction. This is not
a tax form - no tax is due. It is a reporting requirement only.
In addition to that, if a US citizen or permanent resident had
any "financial assets" that, in the aggregate, exceeded $10,000
at any time during the year, they are also required to file a
Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN
Form 114.
And yes, if your father died in 2022, you report for 2022 because
that is when you became the legal owner (even though it wasn't
actually under your control at that time).
that Stu's last paragraph is incorrect. There is no inheritance
until either someone receives a distribution or obtains control
over the inheritance. In other words, until this US resident was
able to withdraw, transfer, move, etc. the inheritance there is no
filing or reporting requirement as there is no inheritance. It
seems to me based on the statements in the post, that this is a
2023 inheritance because his control (the legal ability to access)
did not happen in 2022. That said, don't forget about FATCA and
Form 8938 requirements. If the amount exceeds the peak value
and/or the year-end value in 2023, then the 8938 is required in
addition to the FBAR. Healthy penalties for failing to file the
FBAR and the 8938.
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