Small US inheritance - How do I handle this?

Hi -

My mom died and left me a small bequest of £17,000.  Should I have it transferred to my UK account (where it seems like I will receive approx. £10,235 at today's exchange ratel?

Or should I have the lady at the bank open an account for and deposit it in the US?

What are the tax implications for me?

I also have a Fidelity account which they want me to shut as they say they don't want any more accounts owned by people outside the US and I do not have a residence in the US currently.

Please advise,

Thank you,

Buzzee

More knowledgeable folks may come along but I believe that this inheritance is too small to attract tax from either US or UK tax authorities, so I would not worry about taxes.

Personally, I would not try and open a US bank account just to receive this, I would have it transferred as you suggest.

Same with the Fidelity account, just close it and transfer funds to UK.

Just my opinion, I would keep things simple.

You will not have to pay tax on the inheritance you receive from your mother's estate.

If you deposit the money in the UK make sure you file FBAR if the aggregate of your foreign accounts is ever over $10k and obviously include any interest the money earns on your US taxes.

Your comments about Fidelity worry me. If you are a US citizen I would call them up and explain your situation. However, Fidelity has been attempting to close accounts with foreign addresses recently so that they don't have to deal with foreign transactions. Some US mutual fund companies/brokerages will service the existing accounts of non-resident US citizen customers, but I don't know of any that will open an account for a non-resident. One solution is for you to use the US address of a relative or get a US address of one of the many US mail forwarding companies and get your statements delivered by email to reduce your costs.

Finally what sort of accounts/investments do you have with Fidelity as they might have UK tax consequences and if they are retirement funds you should do everything to keep them with Fidelity as rolling them over could be difficult.

I inherited a brokerage account from my dad in 2008 for $100K + .  I was allowed to just leave it there and I use it for my $ account.  However, I have to use my sister's US address on my account. I don't know how it worked out this way but I did not have to pay any tax on this account at all.   I was not allowed to take any of this money to open a US bank account unless I had a joint account with a US resident, so I didn't.

I inherited a brokerage account from my dad in 2008 for $100K + .  I was allowed to just leave it there and I use it for my $ account.  However, I have to use my sister's US address on my account. I don't know how it worked out this way but I did not have to pay any tax on this account at all.   I was not allowed to take any of this money to open a US bank account unless I had a joint account with a US resident, so I didn't.

When you inherit money there's usually no tax to pay....the estate pays any tax due. Once you have the money you have to pay the usual taxes on all capital gains, interest and dividends. Is the money you inherited in some form of trust?

When you inherit money there's usually no tax to pay....the estate pays any tax due. Once you have the money you have to pay the usual taxes on all capital gains, interest and dividends. Is the money you inherited in some form of trust?

None is in a trust fund. It was in a brokerage account so I left it there.  As a non-resident that was my only choice as I certainly wouldn't exchange it for £.  The account plus some other funds were split 4 ways with my siblings.  None of them kept the brokerage account except me.  The rest of the funds were deposited into my brokerage account.  It has a checking account with it and debit card.  At the time I had zero income as I'd stopped working and accompanied my dh when he volunteered in Africa.  TBH there's not a lot left, just the college funds I set up for granddaughters and a few other investments.  Conveniently I am getting my SS and other US pension deposited into this account. $$ accounts come in very handy as I visit every year.

It was in a brokerage account so I left it there.  As a non-resident that was my only choice as I certainly wouldn't exchange it for £.  The account plus some other funds were split 4 ways with my siblings.  None of them kept the brokerage account except me.  The rest of the funds were deposited into my brokerage account.  It has a checking account with it and debit card.  At the time I had zero income as I'd stopped working and accompanied my dh when he volunteered in Africa.  TBH there's not a lot left, just the college funds I set up for granddaughters and a few other investments.  Conveniently I am getting my SS and other US pension deposited into this account. $$ accounts come in very handy as I visit every year.

Just be aware that US and UK tax could well be due on any interest, dividends, and capital gains you earn on the money in that account. Also if you own US mutual funds you should make sure they comply with UK reporting funds regulations and understand the UK tax consequences of owning offshore funds.

Just be aware that US and UK tax could well be due on any interest, dividends, and capital gains you earn on the money in that account. Also if you own US mutual funds you should make sure they comply with UK reporting funds regulations and understand the UK tax consequences of owning offshore funds.

I haven't been employed since I got this inheritance and the IRS did send me a letter asking why I wasn't filing.  I told them my only income was from these investments and it was less than the amount where I'd need to file.  So they said fine, no problem.  I did start filing this year as I began getting a US pension last year and also sent in the form with all the earnings on investments.  Still too small to pay tax on.

I haven't been employed since I got this inheritance and the IRS did send me a letter asking why I wasn't filing.  I told them my only income was from these investments and it was less than the amount where I'd need to file.  So they said fine, no problem.  I did start filing this year as I began getting a US pension last year and also sent in the form with all the earnings on investments.  Still too small to pay tax on.

OK, but how are you handling your UK tax liability, if any? Are you taxed on an arising or remittance basis?

OK, but how are you handling your UK tax liability, if any? Are you taxed on an arising or remittance basis?

No idea what that means.  But I've had no UK income of my own since 2007.  I'll be getting my UK pension in a couple of months.

No idea what that means.  But I've had no UK income of my own since 2007.  I'll be getting my UK pension in a couple of months.

Depending of your residency status the UK taxes your worldwide income or any money you bring into the UK. So you need to find out if the capital gains and dividends on your US investments are UK taxable. Also the UK has rules about investing in offshore funds which you should understand.

Depending of your residency status the UK taxes your worldwide income or any money you bring into the UK. So you need to find out if the capital gains and dividends on your US investments are UK taxable. Also the UK has rules about investing in offshore funds which you should understand.

I am dual. I never made more than a few hundred a year in dividends plus had zero income of my own. It is in a US account. And it was very quickly spent.

I am dual. I never made more than a few hundred a year in dividends plus had zero income of my own. It is in a US account. And it was very quickly spent.

You need to understand whether you are taxed on an arising or remittance basis by the UK.

You state that you spent the capital gains....if you took the gains and moved them to the UK to spend then you will be liable to UK tax on them as well as US tax. The tax treaty gives the rate of tax that you should pay to the US and any excess would be paid to the UK if the UK rate is higher.

It sounds as if it would have been covered by the £2,000 exemption if not remitted to the UK or if remitted it was below the UK personal tax allowance.

The US social security and other US pension are certainly taxable in the UK, but we don't know the overall level of income so it still may be below the UK personal allowance.

It sounds as if it would have been covered by the £2,000 exemption if not remitted to the UK or if remitted it was below the UK personal tax allowance.

The US social security and other US pension are certainly taxable in the UK, but we don't know the overall level of income so it still may be below the UK personal allowance.

Agreed, there is not enough information of UK tax status and income level to know the answer. I feel that weesoul should seek some advice or do some personal research on their tax situation particularly as they are receiving US pensions and depositing them in US accounts and will soon be receiving a UK pension too and weesoul's posts make me think that they might not be fully aware of their tax situation.