Hi,
Most people think inheritance tax is simple: either you owe something, or you don’t. In reality, what matters most usually isn’t how much you inherited – it’s whether anything about it needs to be reported at all, and what happens the moment you decide to sell it.
You don’t need a taxable estate or a complicated trust for this to matter. If any of these apply to you, there’s a good chance this affects you:
- You’ve ever received a gift or inheritance from someone who lives outside the US
- You’ve inherited or expect to inherit a retirement account – an IRA or 401(k)
- You’re holding onto an inherited property or investment you haven’t sold yet
- You’re a named beneficiary on a life insurance policy, retirement account, or payable-on-death account
- You’re the beneficiary of a trust, whether it’s based in the US or abroad
It reaches far more people than expected – not just those inheriting large estates, but anyone who’s received money or property from a family member, in the US or overseas.
Here’s how it actually works:
- If you receive, or will receive, a gift or inheritance from a non-US person, the reporting rules here are multi-layered. In short, you must report, and if missed, the penalties can be in the hundreds of thousands of dollars. Please email us specifically for help if you expect a non-US inheritance.
- Inheriting something isn’t taxable on its own, but selling it later is – if you sell an inherited asset for more than its value on the date of death, that gain is taxable.
- Assets that pass by beneficiary designation or joint ownership – life insurance, retirement accounts, payable-on-death accounts – often skip probate entirely, but they still carry their own tax rules once you access them.
These rules rarely live in one place – foreign reporting, cost basis, retirement account timing, and state filings each come with their own separate requirements, and missing any single one becomes its own problem. That’s why we put together a complimentary Inheritance Tax Strategy Checklist, and handle the rest under one roof:
- Form 3520 preparation and planning for foreign gifts and inheritances
- Guidance on cost basis and what to expect when you eventually sell
- Retirement account withdrawal planning for inherited IRAs and 401(k)s
- State inheritance and estate tax filings, wherever they apply
Reply to this email by Monday and we’ll send you a free Inheritance Tax Strategy Checklist covering what to know and when right away.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com