Depends what it's from. Like an IRA or just from a bank account. You may get a 1099 or K-1 to report on your return.
At present (2022) only 6 states have an inheritance tax, but when one exists the tax is imposed by the state where the deceased lived, not by the state where the beneficiary resides.
The six states are: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Thanks for your feedback.
This money would be coming from a foreign country, does that make a difference?
I understand your statement about the State tax situation, how about Federal taxes?
@anamasri --
There is no federal tax on a foreign inheritance. However, if the amount received is more than $100,000, then you must file IRS Form 3520.
@anamasri wrote:
Thanks for your feedback.
This money would be coming from a foreign country, does that make a difference?
I understand your statement about the State tax situation, how about Federal taxes?
There is no federal tax on receiving a cash inheritance. Money received from a foreign estate must be reported on form 3520 if the amount is more than $100,000. This form is not supported by Turbotax, you will have to file it on your own, the deadline is the same usual deadline of April 15, 2023, for money paid in 2022. If the payment is in foreign currency use the US$ value on the date of the payment.
If the money is paid into a foreign bank account (if you own a foreign bank account in your name) that contains more than US$10,000 at any time during the year, you must also file another report called an FBAR, although no tax is owed.
If you inherit property (real property like real estate, or other property like stocks, bonds, other investments, or physical personal property), you may have taxable income if and when you sell the property, even if the property never crosses the US border. You will want to make a reasonable effort to document the fair market value of the property on the date the previous owner died, and keep that valuation for whenever you sell the property.