US Citizen inheriting canadian parents estate.

[rvguy1776]

I am in the process of finalizing the estate of my mother who passed this February. She was a Canadian citizen (Alberta resident ) and I am a US citizen/Missouri resident (technically a dual citizen Canada/US). Her residence in Canada has been sold. Will the proceeds transfer to the US tax free? Probate has cleared and the Bank holding her RRSP/RRIF is preparing to release the funds. What tax should/will they withhold before paying out the estate? The value of the RRSP/RRIF is @ 700K. This will be her income on her final tax return. The estate is the beneficiary and I am the sole beneficiary and executor of the estate.

[nelsona]

There will be no US tax on any of this.

The RRSP trustee withholds prescibed amounts, which they are familiar with. Then when the fianl return is prepared, the executor will determine if more or less tax should be paid and pay it from the estate (or collect it back from CRA, and return it to the estate)

You will probably need to file a 3520 for to inform IRS of the estate and it proceeeds, but that is merelya report, no tax.

of course, any income that arises after the sale of house, and from the proceeds from RRSP will be taxable to you (bank interest would only be taxable in US).

[RSmithers]

Nelsona - could you elaborate on your last statement? Do you mean that if the estate earns income before it is distributed that she will be liable for taxes? Or does the estate pay the taxes?

[nelsona]

Any income that is earned after she inherits is on her tax return.

[charlie12]

I am using Tax Act online but they so not seem to have Form 3520 available. I am wondering if this form is filed separately from the regular 1040, much like the FBAR?

[nelsona]

Yes, it is sent separately, perhaps even to a different address.

[charlie12]

Thanks, Nelsona. Will download form from the IRS website. Instructions indicate it must be mailed to IRS Center in Ogden, UT.