Are There Special Tax Rules for a Gift or Inheritance from a Foreign National?

If you have close relatives who are citizens of another country, you might receive a gift or inheritance from them at some point. While you usually do not have to pay taxes to the IRS for this, you may need to report it. 

Posted on October 25, 2021

The United States government doesn’t impose a tax on the person receiving a gift or inheritance, and that holds true for gifts from foreign nationals. But there are special rules involved with money or property coming from abroad:

  • If you receive more than $100,000 from a foreign estate or non-resident alien in one year, you must file a special tax form. This includes gifts from more than one person that may be for less than $100,000 individually but add up to more than that in total. For example, if you receive, $20,000 from your grandmother and $90,000 from your mother, you need report the gifts. 
  • If you receive more than $16,649 (in 2020) from a foreign corporation or partnership, you must report the gift and the identity of the donor. 

You can report these gifts by filing form 3520 with the IRS. The form is filed separately from your income tax filing, but it is filed at the same time - the form is due on April 15th of the year after receiving the gift or bequest. If you fail to file the form, the IRS can enforce a 35 percent financial penalty. 

If you put your foreign inheritance in a foreign bank account, you may need to file a Foreign Bank Account Report (FBAR) with the U.S. Treasury Department. 

Note that some states also impose an inheritance tax, so you should check with your state to make sure you do not owe taxes there. 

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