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Where Taxpayers and Advisers Meet

Inheritance from my fathers IRA

angela10
Posts:2
Joined:Thu May 19, 2022 10:19 pm
Inheritance from my fathers IRA

Postby angela10 » Thu May 19, 2022 10:24 pm

Hi,
Wonder if you can help me please…..
There are 2 USA IRA policies which I am a beneficiary of , my father passed away earlier this year.
I have chosen to take a lump sum and have chosen to pay to 10% USA federal tax (there is no state tax for Florida).
Is this money going to be subject to UK income tax as I understand this is inheritance. The amount is approx. $100,000.
Any advise would be appreciated.
Thanks

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Inheritance from my fathers IRA

Postby darthblingbling » Fri May 20, 2022 12:43 pm

I think lump sums are taxable only in the US under treaty if US sourced, but while you may be able to choose the withholding rate I highly doubt the actual federal tax due will just be 10% and you may need to file a US return to reconcile it correctly.

I'm not a US tax expert but there is one who will no doubt respond in due course.

Can I also ask your age?

angela10
Posts:2
Joined:Thu May 19, 2022 10:19 pm

Re: Inheritance from my fathers IRA

Postby angela10 » Fri May 20, 2022 8:35 pm

Thank you
I am 47
I am struggling to speak to get advise from an accountant as they don’t specialise in international and it’s a ‘grey area’ apparently

DavidTreitel
Posts:271
Joined:Thu Aug 16, 2012 4:31 pm

Re: Inheritance from my fathers IRA

Postby DavidTreitel » Fri May 27, 2022 5:27 pm

USTAX
The 10% is merely a deposit on the final tax due. You will report the distribution on the US income tax return you will be filing (during 2023) for 2022. The final tax payable or refund due will depend on your overall US taxable income for 2022.

UKTAX
Separately, on the basis you are taking complete distributions, the payments are exempt from UK tax under the terns of the US/UK tax treaty.


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