do you have to report inheritances to the IRS?
Thursday, September 4th, 2008 at
12:22 am
Luna asked:
my ex received an inheritance from his father in the netherlands, and he’s spending the money here in America. does he have to report his inheritance to the IRS?
my ex received an inheritance from his father in the netherlands, and he’s spending the money here in America. does he have to report his inheritance to the IRS?
my children arent entitled to the inheritance however the interest made off of the inheritance is considered income according to the attorney general’s office. i am just wondering if he reported it to the IRS or not.
i was told that he’d have to pay taxes on the interest as well. but does he “have” to file with the IRS if it’s from overseas?
Tagged with: Attorney General • Inheritance • Money • Pay Taxes
Filed under: Attorney FAQ
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Anybody who is either a citizen of the US or a resident of the US is required to file a US income tax return based on all of their worldwide income.
Inheritance is not considered income, so he does not have to report that. The interest is income so it is taxable and has to be reported regardless of what country it was earned in. If tax was paid to another country on this interest already, they will get a credit for those taxes paid on their US return so they will not be taxed twice.
If your “ex” is a US citizen or living in the US he will need to file a tax return and report any interest paid to him on the inheritance. The original inheritance is normally not taxable to the beneficiary and the exceptions to that are not likely to apply since this money came from overseas. This is true for Federal income tax but may not be the case for state tax purpose, depending on the state in which you live.
not enough income: is ex US citizen?
nope, but you’re right that interest earned on it is taxable
inheritance tax and income tax are separate entities
parent can make substantial tax free gifts to children annually ($10,000)