A new one for me! Foreign Estate

[Tax Prep by Deb]

I have a client who inherited about 10,900 us dollars from her Mother's estate in a foreign country.  How do I determine if it is taxable in the US?

[Roberts]

Was her mother a US citizen living abroad with foreign assets?

Which foreign country are we talking about? Was her mother a Nigerian Queen?

(If there is a tax treaty with the US, almost certainly such a small amount would be passed through tax free. If it was going to be taxed, the amount would be subject more likely to foreign tax jurisdiction prior to being distributed to a US citizen. JMO)

[Tax Prep by Deb]

From what I know so far, Mother is not a US citizen nor was the asset a US Asset.  I'm going to have to check on Country but my current guess would be Portugal.

[Roberts]

Even if the person is a foreigner, I don't think it would be taxable in the US. If anything, it's a gift and falls below the gift threshold. In the US, gift rules are part of the estate tax rules. If there was going to be tax - it would be taxed back at the home country at her estate level - not at the recipients level. JMO

[Tax Prep by Deb]

My thoughts as well, basically it really doesn't matter tax difference if I include it or leave it off as there income is low enough they would not owe anything.  But like I said it was a new one for me.

[Catherine]

1 hour ago, Tax Prep by Deb said:

My thoughts as well, basically it really doesn't matter tax difference if I include it or leave it off as there income is low enough they would not owe anything.  But like I said it was a new one for me.

In general an inheritance is not income.  Unless there is interest etc earned after a demise, in which case that portion may be income.

[Gail in Virginia]

But you might need to look at FBAR requirements to see if this triggers a filing requirement for her. 

[Lion EA]

And, there is a form when bringing in financial assets, 35XX?

[Tax Prep by Deb]

I believe I looked at the form you are trying to reference Lion, but I believe we are under the threshold, if it's the same one it stipulated it would be needed if over 15,000 and this was under that.