Do Green Card Holders Pay Taxes on Foreign Inheritances?
Getting your green card is exciting. It provides an opportunity to explore the United States and become a member of the global community. That being said, learning how the U.S. Tax Code applies to you can be confusing. Taking it step by step can make it easier to comprehend. So, let’s start with foreign inheritances. Do green card holders pay taxes on a foreign inheritance?
Green card holders are taxed the same way as United States citizens. So, just like American citizens, green card holders do not have to pay federal taxes on a foreign inheritance. However, they might have to report it. Some states have their own laws about taxing a foreign inheritance, which is important to note. As long as your green card is valid, you will have to report a foreign inheritance if it exceeds a certain threshold, regardless of where you live. In fact, you’ll be accountable to the IRS as long as you retain your green card.
The CPAs at US Tax Help can simplify the United States Tax Code for green card holders. We can help you understand how to report a foreign inheritance and how to file your taxes for the first time. To learn more about how United States taxes affect green card holders, visit our website or call the CPAs at US Tax Help today at (541) 362-9127.
Do Green Card Holders Have to Pay United States Taxes on a Foreign Inheritance?
Generally speaking, green card holders are taxed the same way as any American citizen. That means that the citizenship-based taxation system applies to green card holders as well. Even if you have a green card and live outside of the United States, you’re still required to report your finances to the IRS, the same as any American expatriate. So, the same rules are about foreign inheritances are extended to green card holders as well.
The IRS does not tax foreign inheritances if you are an American citizen or green card holder. Some states have their own laws regarding a foreign inheritance tax, but federally, there is no tax. Unlike with other reportable assets, your foreign inheritance cannot be taxed by the IRS.
That’s good news for green card holders, especially those with close family relatives living outside of the United States. Receiving a foreign inheritance may be more likely for people with green cards. However, the United States Tax Code applies to green card holders as long as they retain their green cards. So, while the IRS won’t tax your foreign inheritance, you still must report it.
Understanding how American taxes apply to green card holders can be confusing. If you have a valid green card but are currently living overseas, you may not even consider that you have to report your finances to the IRS. That’s why it’s important to work with experienced professionals, like the CPAs at US Tax Help. Because United States Tax Code applies to green card holders and American citizens the same way, a trusted accountant can help you understand how to report a foreign inheritance correctly.
Do Green Card Holders Have to Report Foreign Inheritances to the IRS?
Although the IRS doesn’t tax foreign inheritances, whether you’re a green card holder or an American citizen, you will have to report it if it exceeds a certain amount. Again, reporting to the IRS doesn’t mean your foreign inheritance will be taxed; it won’t be. It’s just necessary so that the IRS can keep tabs on American money overseas. If you’re a green card holder, your money is treated the same way as an American citizen’s.
Using IRS Form 3520, you need to report a foreign inheritance if it exceeds the value of $100,000. That can be surprising for green card holders, especially if they haven’t lived in the United States for a long time. The American taxation policy is simple. As long as you retain your citizenship, or in this case, green card, you are accountable to the IRS. After all, American expatriates must report their foreign inheritances, along with other foreign financial assets, even if they’ve lived abroad for decades. So, as long as you have a valid green card, you must report your foreign inheritance using IRS Form 3520.
Being exposed to the United States taxation system can be puzzling. What do you have to report? Why do you have to report it? It’s best to think of yourself as just an average American citizen: The same tax requirements and penalties apply to you when you have a green card. Understandably, green card holders may be unaware of their American tax requirements, especially if they spend time outside of the United States. That’s why it’s beneficial to enlist the help of experienced professionals, like the CPAs at US Tax Help. Instead of missing important deadlines and forgetting necessary forms, you can work with an accountant to help you report your foreign inheritance as a green card holder.
Do Green Card Holders Have to Pay Taxes on a Foreign Inheritance if They Don’t Report It?
Just like any American expatriate or resident, green card holders will face penalties for failure to report their foreign inheritances. While your foreign inheritance won’t be taxed if you report it properly and on time, you can incur financial penalties if you don’t. Unfortunately, green card holders who are new to United States taxes may be unaware of the requirement to report their foreign inheritances.
The moment you receive your green card, you should contact an experienced accountant. For example, the CPAs at US Tax Help can assist green card holders in understanding how to approach the United States reporting requirements. Even if you leave the country, you will still need to abide by the tax laws in America, as long as your green card is valid. For green card holders especially, understanding how the IRS treats foreign inheritances and assets is essential.
If you fail to report a foreign inheritance to the IRS as a green card holder, you’ll incur the same fines as any American citizen. For each month past the deadline that you don’t report, you may be fined 5% of the total amount of your inheritance. When all is said and done, you can lose a significant amount of your total inheritance because of fines. You can avoid that by seeking tax guidance once you become a United States green card holder.
Learn How to Report Your Foreign Inheritances as a Green Card Holder
Navigating IRS filing requirements can be overwhelming at first as a green card holder. To learn how to report your foreign inheritance and how United States taxes affect you as a green card holder, visit us online or call the CPAs at US Tax Help today at (541) 362-9127.