Receiving a Bequest from Abroad?

If the value of aggregate foreign gifts that you receive during any year exceeds $10,000, you must report each foreign gift to the IRS. (The $10,000 figure will be increased for inflation after 1996.) A foreign gift is any amount you receive from a non-US person which you treat as a gift or bequest. A non-US person is any person other than a citizen or resident of the US or a domestic partnership or corporation. The term non-US person also includes a foreign estate or a trust treated as a foreign trust. 

Foreign gifts do not include qualified tuition or medical payments made on behalf of the recipient or gifts which are otherwise properly disclosed on a return under the separate requirements applicable to amounts received from foreign trusts.
 

Foreign gifts and bequests which are reportable, must be reported each year on the new form 3520.

The penalty for failing to report a foreign gift that must be reported is 5% of the amount of the gift for each month the failure continues, up to a maximum of 25%. The penalty will be excused if reasonable cause for the failure can be established.

CREATIVE SOLUTIONS TO CROSS BORDER TAX ISSUES

Mark T. Serbinski Certified Public Accountants and Serbinski Partners PC, Chartered Accountants specialize in situations involving the taxation of U.S. citizens living abroad and Canadians living or working in the United States.  Please contact us for a complimentary initial review of your particular situation on a confidential basis.

Last Update: Jul 21, 2008    Copyright ©2007 by Serbinski & Associates, Inc., - ALL RIGHTS RESERVED Unauthorized reproduction prohibited. Although we strive to provide accurate and timely information on this site, the information contained herein deals with complex issues in a concise manner, which may cause unintended results if taken out of context, and is therefore intended for general information purposes only. No action should be taken without obtaining prior legal, accounting or other appropriate professional consultation. To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained on this web site was not intended or written to be used, and cannot be used, by the recipient (a) for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions and (b) for the purpose of promoting, marketing, or recommending any tax-related matters addressed within to another party.