Fill Form 3520 Bequests 2023-2024

Hey, it's tax season and Tax Mama is here to help. Today, Tax Mama received an odd tale from Joe regarding some tax issues. Joe explains that his cousin's wife, who was born in Canada and is also a US citizen, will be receiving a $150,000 inheritance from her father's estate. His cousin and his wife live in the US, but her parents are Canadian citizens. Her father had been living in the Bahamas for the past few years and passed away in 2009, still residing in the Bahamas. Joe's cousin has no idea whether Canadian or Bahamian taxes were paid from the estate. They sought help from a high-priced accounting firm recommended by a local organization, but that turned out to be not very helpful and charged a significant fee. Joe is looking for guidance on this tax issue. Firstly, Joe, the US inheritance tax issues are relatively straightforward. There are no US federal taxes on an inheritance, period. However, if your cousin's wife is going to receive such a large sum of money in one year, she will need to fill out Form 3522, reporting the source of the funds and proving that it is not taxable. This step is quite simple. Secondly, some states may have inheritance taxes, but the easiest way to find out if your cousin's wife needs to pay them is by contacting the state's tax authority. A quick call will provide the necessary information, free of charge. Now, regarding the missing word in the first phrase, I assume you were trying to say that her father was born in Canada and is a US citizen. If that's the case, there might be an issue. In 2009, the US did have an estate tax in place, and if her mother is not a US citizen, the total...