Tax on UK Spouse's Inheritence/Gift

Hi All,

I wonder if anyone can help. I had a look around the forum first but couldn't find info relating to this situation.

I am a UK citizen married to a US citizen and we live in England. I recently lost a family member with their property passing to my father. He would like to give me some money from the sale. It is by no means a massive amount (though big to me) but exceeds the US gift limit of $14,000.

As the money will go to me and my bank account, will my husband have to pay US taxes on it?

I would be grateful if anyone is able to offer any advice or hear from anyone who has had dealt with a similar situation.

Thanks

The gift is to you, not your husband so he doesn't have to report it.

In the USA, even if the gift exceeds the $14k there is no tax to pay.  The reason large gifts are reported to the IRS is so they can keep a lifetime total of the money given away by the giver for inheritance tax avoidance purposes. The UK HMRC has a similar rule for giving away money and assets to reduce inheritance tax but there is a 7 year limit. (ie if you die within 7 years of gifting money and assets then it will still be counted as part of your estate)

This is just my understanding, maybe someone more knowlegable will come along and answer more fully.

Cross post with durhamlad

Does your husband include you on his US tax return by filing MFJ (married filing jointly)? Are you a US Person otherwise?

If not, then there is no concern regards US tax. If so, is the amount over $100,000? If it is, then he may want to look at form 3520 for information reporting requirements.

http://www.irs.gov/Businesses/Gifts-from-Foreign-Person

If your account is held jointly with your husband (he has signature authority), then he may have an FBAR obligation, or possibly a form 8938 requirement.

Edit: sorry, kept messing up him, her, theirs, etc. and who is the US person

As I understand it durhamlad is right - the $14,000 is the maximum amount that you do not have to report to the IRS nor will count against your lifetime estate exemption (there are some exceptions where the limit may not apply). Over that you do have to report it, but you have the option of either applying it to your lifetime exemption (provided you haven't reached it - unless you're wealthy chances are you're okay) or paying gift tax on it now (the former is probably better unless you anticipate having an estate over the lifetime exemption amount).

Thank you all very much for your help.

I'm a UK citizen, not US. We don't have any joint accounts and he files on his own so sounds like we should be ok.

Thanks again, really appreciate it!