Inheritance from Japan

Forum|Forum|3 years ago
January 13, 2023
2 replies
4 views

Hello,

My father passed away in Japan last December. I will be getting a lump sum of money wired to my bank account in the U.S. I understand that California does not have inheritance tax, and the amount I get is way below the value for it to be applied to the federal estate tax. Do I have to pay any kind of tax for this amount in the year 2024, perhaps it will be treated as an income?

DoninGA

Level 15

A cash inheritance is not reported on a federal tax return so is not taxable income.

madcapselAuthor

Level 2

I am sure the government monitors all international wire transactions over $10,000, and the bank institutions will report it as well. If this lump sum (I'm guessing it will be about $75,000) appears in my account, unless there is a note attached to this transaction saying that the purpose of this transfer is for inheritance, I would think they'll have questions. Perhaps this is something I need to further investigate with my bank. But, for the topic of tax, you are saying it's not taxable (with a caveat that i could prove it is inheritance related)?

madcapselAuthor

Level 2

I apologize, I wasn't aware that there was a second reply to my original question. My father wasn't an American citizen. I will be paying inheritance tax within the Japanese legal system. But I'm relieved I do not have to do so here in the U.S.

BillM223

Level 15

Was your father a US citizen or US green card holder? If so, you do not report the inheritance on your tax return. However, if your father was a nonresident alien, then you may have to report the inheritance if it was more than $100,000 on form 3520. You don't report the inheritance as income, but the 3520 is an informational form to report a financial transaction with an foreign entity.

Note that the IRS has not yet updated this form for 2022.

Also note that TurboTax does not support this form, please see the excellent answer from DoninGA here.

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