Inheriting money from USA

S

Susiesue

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A relative has left me a sum of money in her will. She was born in USA. Lived all her life there and passed away there. Solicitor for the estate there said there is no inheritance tax in the state of New York only on life insurance or executors commissions. So do I then pay inheritance tax in this country on what I receive to the same amount as I would if inheriting from a relation here.
 
Yes.

What matters for CAT is where you live.

The sources of the assets is not the main issue.


EDIT: please see comment below by somebody who knows more than me, T McGibney.
 
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The automatic tax exemption for US inheritances under a US will by Irish residents under the Double Tax Convention between Ireland & the USA in respect of estate and inheritance taxes could be relevant here.

Further info here.
 
AAAContributor said:
The automatic tax exemption for US inheritances under a US will by Irish residents under the Double Tax Convention between Ireland & the USA in respect of estate and inheritance taxes could be relevant here.

Further info here.
Click to expand...
Thank you. I had read a little on that topic but wasn't entirely sure if it would apply as I thought that there should be some form of tax taken from inheritance in the USA. I'll check up on that further.
 
I guess not.

We were in this situation a year ago. Relative (aunt) left money to her siblings here. When it was paid (gross) I looked at filing IT38s for them (to pay CAT). When I saw I needed a PPS for the deceased I called Revenue and they explained that because the deceased had effectively no link to Ireland (they left a long time ago and had no assets here) that there was no tax due on the inheritance. This only applies if the deceased lived in the US or UK and all their assets were outside Ireland.

I googled a bit more and I don't think it was easy to find on the Revenue website. There was an article in the Irish Times on a case just like this (as I guess it's common) and they explained the conditions under which no tax is due. I know it's like this in other countries (eg NL) where if the deceased has no link to the country and the assets are all foreign they assume you will be taxed at source and you simply don't pay anything. If you are in the US and have no link to Ireland you'll not be so lucky: Ireland taxes you on anything you inherit from here wherever you live.
 
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The default rule is that, if you are resident or ordinarily resident in Ireland, you are liable to CAT on your worldwide gifts and inheritances.

That rule can be modified in relation to a particular country by the terms of a Double Taxation Agreement between Ireland and that country. However most of Ireland’s DTAs say nothing about inheritance tax/estate tax/CAT. (This is because they are based on an OECD model tax treaty that does not cover inheritance tax/estate tax/CAT.)

But Ireland’s DTAs with the US and the UK do address inheritances. Under the IRL/US DTA federal estate tax paid in the US is allowable as a credit against CAT liability in Ireland. That wouldn’t help here because, apparently, no US estate tax is payable, so no credit.

But, In addition, the DTA provides that, if the deceased was domiciled in the US and not in Ireland (which, it seems, she was) then the inheritance of property located in the US does not attract CAT in Ireland. There are complex rules in the DTA for determining where property is located.

In this case we’re told that the Irish resident is inheriting a “sum of money”. If that’s sitting in a bank account belonging to the deceased, then I think there’s no problem. But if it represents, say, the value of the deceased’s shares in an Irish company (or, indeed, a company incorporated anywhere outside the US), then that’s not property situated in the US, and so CAT is payable.

So it crucially matter exactly what property was left under the terms of the will. There’s an excellent chance that it doesn’t attract CAT but, if it turns out to be the wrong kind of property, it may.

SFAIK even if there is no liability to CAT you still have to file a CAT return disclosing the inheritance and claiming the relief.
 
TomEdison said:
SFAIK even if there is no liability to CAT you still have to file a CAT return disclosing the inheritance and claiming the relief.
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In our case I was told by the woman in Revenue that there was no need to file a CAT return. I submitted the same question to Revenue through MyEnquiries and received no answer and the case got closed. When I went to the banks to lodge USD cheques (all over the CAT threshold) I had to fill out a couple of forms but there were no questions about the sources of the funds or if they were reported to Revenue.
 
In my situation it's the proceeds from the sale of house of the deceased lady which has been divided between a number of people . She was born in the USA and lived all her life there.
 
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