My wife may shortly be receving a sizable inheritance from a dying relative in Asia. I believe inheritance is nontaxable, but would we need any special documentation on file when we send the money to the US? The relative is from a rural area where no one really has official wills or anything like that. The wishes of the deceased are normally just carried out by the eldest son. I am concerned the IRS might try to call the inheritance a "gift" which it is not. Thanks
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Gifts aren't taxable income either.
Ask your banker about any special forms that may need to be filed to report the cash transfer from overseas.
-- Phil Marti Clarksburg, MD
Of course it is, a gift at death. Gifts are not taxable to the recipient, but there are banking forms to file on the transfer of funds.
If the amount of the inheritance exceeds $100,000, then your wife must file Form 3520 for the year that she receives the inheritance. No tax is due. If the form is not filed and the IRS finds out, the IRS can assess a penalty of up to 35% of amount of the inheritance.
--Chris
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