Gifts and Inheritance Taxation in the US
Unlike Israel, the US taxes gifts and inheritance, but exempts up to $5.45 million, as of 2016.
This exemption is an “offset exemption”, deducted yearly from the sum value of gifts given to a person, exceeding $14,000.
Taxation is imposed on the giver of the gift/inheritance, and enables the receiver to “fill in the shoes” of the giver.
Gifts whose worth exceed $14,000 must be filed.
Inheritors are often applied for a Step Up for the fair value of the property received.
Third-generation inheritors may be subject to additional taxes.
Inheritance must be reported when the sum of assets of the deceased on the day of passing exceeds the exemption limit,
or when a person has chosen to pass on the remaining unused exemption to a spouse who is an American entity.
An exemption of up to $148,000 per year is available to spouses who are not an American entity.
Should you own assets the net worth of which exceeds the exemption limit,
it is imperative that you seek advice and plan future returns, in order to properly handle the matter of inheritance.
Gifts/inheritance given by a foreign entity to an American one requires filing.
But, is exempt if their total worth does not exceed $100,000 (personal) or approximately $15,000 (from corporations).
Filing is performed via form 3520 and is sent separately from the personal return statement, yet is subject to the time of submittal of the US tax return.