foreign burial benefit insurance

[Peter21]

My wife´s mother died in 2019 in Germany. She was not an US citizen and no US resident. She had a burial benefit insurance over about $6000, the beneficiary is my wife. We did not receive the money yet, as the German IRS still needs to determine, if we have to pay inheritance tax in Germany (we will not but it is how it is). So they stopped the payout from the insurance until they reach a conclusion.

As far as I know, this it not taxable income (the actual burial costs were even higher anyways).

But I have the following questions:

1. does this insurance need to be reported as an account in FBAR?

2. when do we report it on form 3520, in 2019 when e received it "on paper" or in 2020 when we receive it in our bank account?

Thank you

[KarenJ2 · Accepted solution]

You must file an FBAR if you are a US person with a financial interest or signature authority over at least one financial account located outside the US and the combined total of all your foreign accounts exceeds $10,000 on any one day during the year

If you are required to file Form 3520, you will need to file it in the year you receive the money.

One of the requirements of filing Form 3520 is if you are a US person and you receive over $100,000 from a nonresident then you need to report that on Form 3520.

You will need to review the Who Must File on page 1 of the instructions for Form 3520 as some of the reporting requirements  involve foreign trusts and I am not sure if that applies to you.

Instructions for Form 3520