My daughter and her three daughters have dual citizenship with the US and Canada and are permanent Canadian residents. She is a widow with no income from US employment and lives on her widow's pension and income from some Canadian investments. In order to avoid any confusion when they cross the border, she files a US tax return each year though so far she has owed no US taxes.
Her mother-in-law (also a Canadian citizen and resident) established RESPs for each of the three girls, which they inherited upon her death. My daughter is the successor trustee for the RESPs but has never contributed to them. How is the inheritance and any trust income handled on the US tax filing? Since it's not now and never was her money, it shouldn't be considered her income should it?
IRS Treatment of Inherited RESP
Moderator: Mark T Serbinski CA CPA