Background – my husband was a naturalized US citizen who resided in the US for 60 years. His son, however is a Canadian citizen living in Toronto with no financial ties to the US. My husband recently passed away and I am the executor of his estate. He left our son a small inheritance. The IRD attributable to our son will be about $260 (interest and dividends only) and the calculated tax is about $40 (there may still be some outstanding dividends to be paid to the estate). Our son will file a 1040NR tax form with associated NEC this coming spring.
My question – As executor do I have to file IRS form 1042 (with its associated forms)?
Condolence on your husband's passing. Off the top of my head, I believe you do have to have file 1042 and related forms. Do take a look at the U.S.-Canadian Tax Treaty, the tax rate may be limited to 10%.
You mentioned Income with Respect of a Decedent of $260. So I assume that's just the unpaid accrued income earned before his death. If the annual income is still rather small, it may be more troublesome than its worth. Has your son considered disclaiming the inheritance? However, a qualified disclaimer must be declared in writing within 9 months from date of death.
Thanks you. I suspected that I would have to file a 1042, but I was hoping I could somehow avoid it. It is not a straight forward form. Although the IRD is small, there is enough Corpus (mostly stock that did not pay dividends) to go to the trouble of filing the 1042.
I did read the treaty and it appears that the tax rate will be 15%. But I may just try and find a tax accountant (here or in Toronto) to do the 1042 form. There is still plenty of time to get it all figured out.
Regards
Linda