Inheriting money from Canada

[CanAmCharlotte 0]

I have found some information on the Internet about this but I just wondered if anyone has any firsthand knowledge. If you are a Permanent Resident or now an American citizen (as I am), what happens when someone in Canada leaves you money?. As it is post-tax money, are you free and clear to transfer it to a US bank account?

Thanks!

[CarlosAndSveta 808]

I have found some information on the Internet about this but I just wondered if anyone has any firsthand knowledge. If you are a Permanent Resident or now an American citizen (as I am), what happens when someone in Canada leaves you money?. As it is post-tax money, are you free and clear to transfer it to a US bank account?

Thanks!

As a U.S. citizen any money you receive through inheritance is received tax-free for U.S. Federal Income Tax purposes. I don't know Canadian tax law so I don't have any idea if Canada will try to impose any kind of tax on the transfer of your inheritance from Canada to the U.S.

[CarlosAndSveta 808]

Here is the portion of the U.S. Internal Revenue Code that talks about inheritances:

§ 102. Gifts and inheritances

(a) General ruleGross income does not include the value of property acquired by gift, bequest, devise, or inheritance.(b) IncomeSubsection (a) shall not exclude from gross income—(1) the income from any property referred to in subsection (a); or(2) where the gift, bequest, devise, or inheritance is of income from property, the amount of such income.Where, under the terms of the gift, bequest, devise, or inheritance, the payment, crediting, or distribution thereof is to be made at intervals, then, to the extent that it is paid or credited or to be distributed out of income from property, it shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property. Any amount included in the gross income of a beneficiary under subchapter J shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property.© Employee gifts(1) In generalSubsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee.(2) Cross referencesFor provisions excluding certain employee achievement awards from gross income, see section <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000074----000-.html" style="text-decoration: none; color: navy; ">74 ©.For provisions excluding certain de minimis fringes from gross income, see section 132 (e).

[CarlosAndSveta 808]

Here is the portion of the U.S. Internal Revenue Code that talks about inheritances:

§ 102. Gifts and inheritances

(a) General ruleGross income does not include the value of property acquired by gift, bequest, devise, or inheritance.(b) IncomeSubsection (a) shall not exclude from gross income—(1) the income from any property referred to in subsection (a); or(2) where the gift, bequest, devise, or inheritance is of income from property, the amount of such income.Where, under the terms of the gift, bequest, devise, or inheritance, the payment, crediting, or distribution thereof is to be made at intervals, then, to the extent that it is paid or credited or to be distributed out of income from property, it shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property. Any amount included in the gross income of a beneficiary under subchapter J shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property.© Employee gifts(1) In generalSubsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee.(2) Cross referencesFor provisions excluding certain employee achievement awards from gross income, see section <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000074----000-.html" style="text-decoration: none; color: navy; ">74 ©.For provisions excluding certain de minimis fringes from gross income, see section 132 (e).

Hopefully this will be easier to read.

§ 102. Gifts and inheritances

(a) General rule

Grossincome does not include the value of property acquired by gift, bequest,devise, or inheritance.

(b) Income

Subsection(a) shall not exclude from gross income—

(1) the income from any property referred to insubsection (a); or

(2) where the gift, bequest, devise, orinheritance is of income from property, the amount of such income.

Where,under the terms of the gift, bequest, devise, or inheritance, the payment,crediting, or distribution thereof is to be made at intervals, then, to theextent that it is paid or credited or to be distributed out of income fromproperty, it shall be treated for purposes of paragraph (2) as a gift, bequest,devise, or inheritance of income from property. Any amount included in thegross income of a beneficiary under subchapter J shall be treated for purposesof paragraph (2) as a gift, bequest, devise, or inheritance of income fromproperty.

© Employee gifts

(1) In general

Subsection(a) shall not exclude from gross income any amount transferred by or for anemployer to, or for the benefit of, an employee.

(2) Cross references

Forprovisions excluding certain employee achievement awards from gross income, seesection 74©.

For provisions excluding certain de minimisfringes from gross income, see section 132(e).

Edited December 13, 2010 by CarlosAndSveta

[Inky 1,111]

Make sure to have proof that it is inheritance incase they try to make a big deal out of it or something.

[CanAmCharlotte 0]

Thanks for the replies. This helps!

[tbaygrrl 2]

I recieved an inheritance this year from Canada. In terms of taxes, the estate trustee in Canada would be responsible for any and all taxes on the estate account. When they do the bank transfer, make sure that the transfer shows that it came from an estate account. In the US you are tax free on inheritances under 5 million I believe, but you still need to report it on your tax return, especially if it is over $100, 000.00

So in terms of taxes, if it's under 5 million you are clear of paying them on it, just make sure to report it and get the transfer form from the bank showing it was from an estate account.

[CanAmCharlotte 0]

I recieved an inheritance this year from Canada. In terms of taxes, the estate trustee in Canada would be responsible for any and all taxes on the estate account. When they do the bank transfer, make sure that the transfer shows that it came from an estate account. In the US you are tax free on inheritances under 5 million I believe, but you still need to report it on your tax return, especially if it is over $100, 000.00

So in terms of taxes, if it's under 5 million you are clear of paying them on it, just make sure to report it and get the transfer form from the bank showing it was from an estate account.

I sincerely appreciate your input!