Money from France, Inheritance- how is it treated by U. S. IRS?

schamp · 08-18-2012, 08:42 PM

I have a friend whose mother died last month. Mother was French. Worked a lifetime in France. The daughter (my friend) married a US Army guy many many years ago. The daughter is now a US citizen and has lived in the U. S. for at least 30 plus years.
She stands to inherit a good amount. The question is how is the money coming from France going to be treated by the U. S. I. R. S.? I don' t have a clue. Will she need an accountant that is up on International Laws? At this point, I can't even give her bad advice. Thanks, Schamp

Joeaksa · 08-18-2012, 09:24 PM

Tell her to take a vacation to Europe and talk with the executors of the estate in person. She might want to leave it there and take a chance on the Euro for a while. Otherwise I would setup an account with a credit card where she could draw on the funds when or as needed.

The US Govt will bend her over if she attempts to bring all of it over here in one lump sum if its over $10k. Personally I would do anything do stay away from doing this...

LeeH · 08-18-2012, 10:10 PM

Inheritance is not a taxable event.

Jim Bremner · 08-18-2012, 10:10 PM

Quote:

Originally Posted by Joeaksa

Tell her to take a vacation to Europe and talk with the executors of the estate in person. She might want to leave it there and take a chance on the Euro for a while. Otherwise I would setup an account with a credit card where she could draw on the funds when or as needed.

The US Govt will bend her over if she attempts to bring all of it over here in one lump sum if its over $10k. Personally I would do anything do stay away from doing this...

SHAME on you for trying to steal the governments money! it's theirs! really!

yup, use a debit card for everything in life and every extra $$$ that you earn goes into savings.

Dottore · 08-19-2012, 01:21 AM

Quote:

Originally Posted by LeeH

Inheritance is not a taxable event.

I don't know the answer, but would be very surprised if it was this simple.

Spend an hour with a good tax accountant.

shinrai · 05:05 AM

HSBC Premiere account.

....but first spend an hour with a good accountant as mentioned.

johnsjmc · 08-19-2012, 03:52 AM

I read there is no US Federeal inheritance tax .I,m sure the French gov,t will get a share first Some states may also want a share. There are IRS reporting requiments. If over 10k in foreign deposits they need to file a TDF 90-22.1. there is also a form 3520 which I think is for taxpayers with signing authority on foreign accounts .
Try NOT to take the advice given above about ways to hide it ,penalties for failing to comply with the reporting requirments can be up to 250K and 5 yrs. in prison.

MRM · 05:33 AM

If the money stays off shore there is no US tax. She can keep it in France and only pay whatver the French tax is. The estate may pay tax before the money gets to her, so the inheritence will be net zero tax to her in France. She can keep it there and spend it without any US tax consequences because US law doesn't apply to money that doesn't come into US jurisdiction.

US tax comes into play only if the money is repatriated to the US. I can't remember the rule on that. It's either treated as ordinary income, which has normal tax rates, minus any tax paid in France, or it's treated as an inheritance. The US does still have an estate tax, as most people know, but the excemption is currently $5 million, so the money might be tax free to her up to $5 million. I simply don't remember which it is.

Since that's a pretty big difference, she better not guess. She should go to a larger accounting firm that deals with this issue. They'll know the answer off the top of their head and hve the right form at their fingertips.

Zeke · 08-19-2012, 06:21 AM

The 5 million is scheduled to be reduced to 1 mil next year.

jwasbury · 08-19-2012, 06:47 AM

US citizens are required to report and pay tax on worldwide income, so leaving assets offshore does not mean you don't pay US tax. However, Receipt of gifts or inheritance is not taxable income under US tax law. US Estate and gift taxes (if applicable) are borne by the grantor rather than the grantee. Presumably if the decedent was a French citizen and resident, then the French estate/gift tax regime will apply.

The exact nature of the assets in the estate will determine what course of action should be taken after the estate process is concluded. The US-France tax treaty specifically covers things like owning real estate and business interests...situations where there is a tangible presence in the country of non-residence. Generally when there are income producing tangible assets in the non resident country, there will be an ongoing requirement to file a return and pay tax in the non resident jurisdiction. There may be no such requirement if the assets in the non resident country are only bank/cash accounts. The treaty will also contain provisions to mitigate double taxation.

Bottom line is this stuff can get complicated. Have your friend seek professional counsel. Sounds like she can afford it.

Joeaksa · 08-19-2012, 08:32 AM

Quote:

Originally Posted by Jim Bremner

SHAME on you for trying to steal the governments money! it's theirs! really!

yup, use a debit card for everything in life and every extra $$$ that you earn goes into savings.

I know... I know! The Govt has already taxed it 2-3 times along the way yet when you die they want to tax you again on it. Trust me, they will find a way if at all possible.

Thats why I have a private trust and everything goes in there. When I pass the next in line takes it over and no muss, no fuss and no taxes...

Joeaksa · 08-19-2012, 08:36 AM

Quote:

Originally Posted by johnsjmc

Try NOT to take the advice given above about ways to hide it ,penalties for failing to comply with the reporting requirments can be up to 250K and 5 yrs. in prison.

Who said anything about trying to hide it? Not ONE post above tells the OP to hide anything...

johnsjmc · 08-19-2012, 08:52 AM

The US Govt will bend her over if she attempts to bring all of it over here in one lump sum if its over $10k. Personally I would do anything do stay away from doing this...[/QUOTE]

Sounds like advice to HIDE something to me . Bring it in small amounts to avoid reporting regulations.?

RWebb · RWebb's Garage

leave it France and go visit it from time to time, spending it on a nice French vacation

johnsjmc · 08-19-2012, 10:10 AM

Leave it in France is fine and spend it how ever you wish.BUT don,t forget the IRS reporting rules. If found guilty of failure to report the fines can be substantial.

patssle · 08-19-2012, 10:24 AM

Does holding money in another country protect you from lawsuits or some healthcare disaster (as we have a wonderful healthcare system that likes to bankrupt people)? Or can they go after that money and "extradite" it back to the U.S.?

johnsjmc · 08-19-2012, 10:39 AM

I don,t know for sure but I expect the answer is yes . You get sued in the jurisdiction where the loss happened. If you are worth millions overseas then it might be worth attempting to sue you somewhere else but collecting a civil debt in another country would require a treaty.
A friend,s father avoided child support by moving from Canada to Hawaii many years ago. Hawaii was one of 2 or 3 states without a reciprocal enforcment agreement with Ontario at the time.

nota · 08-19-2012, 10:42 AM

a buddy's dad who was a swede who lived then died in Portugal
he was in the USA and
the money was in a swiss bank/brokerage

the swede's wanted 50%
the port's wanted 50%
and the usa wanted 50%
that is 150% leaving a debt but no cash

the swiss did not want anything
so the money stayed in the swiss bank/brokerage
and a generational skipping trust was established
port and swede's got stiffed
he paid income tax on funds transferred in to the usa
the estate was in the 8 figure range

rules may have changed
call an accountant

Joeaksa · 08-19-2012, 10:43 AM

Quote:

Originally Posted by johnsjmc

The US Govt will bend her over if she attempts to bring all of it over here in one lump sum if its over $10k. Personally I would do anything do stay away from doing this...

Sounds like advice to HIDE something to me . Bring it in small amounts to avoid reporting regulations.?[/QUOTE]

Thats YOUR opinion. You sound like the perfect tax man to me, always looking for a crime when there is none...

johnsjmc · 08-19-2012, 10:53 AM

Quote:

Originally Posted by Joeaksa

Sounds like advice to HIDE something to me . Bring it in small amounts to avoid reporting regulations.?

Thats YOUR opinion. You sound like the perfect tax man to me, always looking for a crime when there is none...[/QUOTE]

Nobody is suggesting avoiding anything here except you . Avoiding reporting is a crime ,leaving your money in France isn,t .
Why would you fear "being bent over by the IRS " if you aren,t trying to hide something???????????????
The original post did not ask how to evade tax only what needed to be done in the circumstances