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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hi Wendy, I read through a number of the answers you

Resolved Question:

Hi Wendy,

I read through a number of the answers you gave to other clients, and thought they were very useful, so I decided to ask you one of my own.

I am a US citizen and have been living and working in Japan for about 20 years. I have a salaried position in Japan, and I file US taxes each year, but my salary in Japan is fully excluded under foreign income exclusion. I do have some interest/dividend income in the US and I have been paying taxes on that income.

My aunt (Japanese citizen) passed away last November and in her will, she left me the bulk of her estate (total value of the estate was about 950K, I received about 50K in cash and 800K in real estate -a house and an apartment building. The rest went to relatives and religeous organizations). Because of the size of the estate and applicable deductions, there were no estate taxes levied in Japan, and my understanding is that no tax would be due on for this inheritance in the US.

However, I am receiving rental income from the apartments in Japan, and have been advised that I will need to report this as rental income on my US return. Is this correct?

Also, I am wondering if I need to file a form 3520? I received the 50K in cash plus the real estate, but do not intend to transfer any of these funds to the US. Does the 3520 still need to be filed if the funds or proceeeds remain overseas (not transferred to the US) or does it need to be filed if I meely obtain ownership of assets in excess of the threshold amount, even if they remain overseas.

Thank in advance for your advice....
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.

Hello Bart,

The answer is yes to both of your questions. As a US citizen you are required to report your worldwide income from any source, and that would include the rental properties you now have in Japan.

And yes, you would need to file a form 3520 to report the inheritance that you received from your aunt. The reporting requirements for a US citizen living abroad are the same as if you were living in the US. I am giving you a link below which summarizes some of those requirements, including the need to file a form 3520.

If this answer was helpful, please press the Accept button.

Thank you.

http://www.irs.gov/businesses/small/international/article/0,,id=96796,00.html

 

 

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