What about foreign gifts and inheritances? These rules aren’t as well publicized but the stakes are huge.
Have you received a gift or inheritance from a loved one living in a different country? The IRS wants to know about it, and failing to notify them could cost you. As pointed out in an
article at Forbes, “Beware IRS Reporting Of Foreign Gifts Too,” you will need to file an IRS Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if you receive:
- More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or
- More than $14,375 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts.
You are required to report these bequests on Form 3520 when you actually or constructively receive them. Late reporting penalties are high – five percent of the gift’s value for each month the gift is not reported, up to 25 percent of the total value.
Remember that income from abroad is taxable, and the IRS is looking at foreign accounts ever more closely under the Foreign Account Tax Compliance Act (FATCA). To learn more, read the Forbes article, “How to Report Foreign Gifts and Bequests to IRS.” Better yet, consult with Meier Law Firm for counsel on your individual circumstance.
Reference: Forbes (August 13, 2012) “Beware IRS Reporting Of Foreign Gifts Too”