PetrifiedExPat

Hi all,

We are in a fortunate position whereby a probate decision has resulted in approx. 50-100k (do not want to be to specific) GBP being available to help clear our second mortgage.

The money will be a gift and sent to the US where the house is located (therefore, converted to USD).

Can people advise on money transfer (transferwise??), tax reporting (US federal and MA state, even UK??), gift limits et al that may arise? I am US resident and have one source of income here in the US, I have no UK interests at all (except a few 1000 in a high street bank account).

Thank you in advance, BE is a fantastic resource for this.

H

Pulaski

Is it a gift or an inheritance?

Some states tax inheritances in the hands of the recipient, you should check if MA does.

Most reporting is handled by your (receiving) bank, and is transparent to you. Do not worry about this, at all, it is perfectly routine, but before the funds arrive tell your bank to expect the money, tell them the source of the funds, and ask them to note it in your file.

If the money passes through your account in the UK, even if only for one day, then you will trigger FBAR reporting for the year.

lansbury

For the money transfer I would call a few brokers and get them to give you a quote. With that size sum you should get a better deal over the phone then on their web site.

Nutmegger

If this is an inheritance, have it sent to you by the executor directly from the probate account. The executor should provide UK Revenue form R185 to show the net income during the administration period, the tax already deducted, and your share thereof. Give this info to your accountant for your next tax return. You will file IRS form 3520 to evidence your receipt of the bequest -- if it is over $100,000, so you may avoid having to do this. This is a report, and does not generate federal tax.

Cook_County

The estate is also a foreign financial asset so is 8938 reportable too...

Nutmegger

I don't have expertise in this, so my understanding may be totally wrong, but my accountant didn't deem this form necessary. Doesn't the UK form show that the relevant taxes were paid while the beneficiary had ownership -- and as soon as the money is transferred to the beneficiary in the US doesn't it stop being a foreign asset?

PetrifiedExPat

Dear all,

I appreciate the replies.

It is inheritance by intent, however, de facto the money passed to my mother as per the will, and she is generously through her (and my deceased fathers) wishes gave us the cash to help out. Therefore, it classifies as a gift.

My main concern is US tax owed at end of year..

Thank you,

H

Pulaski

So please ignore Cook_County's advice above. If you were not named in the will there was no trust to report, and if you mother sends the money directly from her account in the UK, the gift won't create an FBAR-reportable account either.

Gifts received from overseas are not taxed in the US. The giving of gifts may be taxable in the US, but that is irrelevant to your situation.

Cook_County

I agree. Now we have more information this is a gift, not an estate; so simply 3520 filing.