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ITIN as beneficiary of US Estate


Just Breve - ITIN as beneficiary of US Estate

Are you the beneficiary of a US Estate? If you have a US family member or friend pass away and leave you an inheritance and you are a non US person, you will require an ITIN (Individual Tax Identification Number) as beneficiary of US Estate.


Why do I need an ITIN?


ITINs for beneficiaries are required to report the transaction to the IRS. They are also, almost always, required before a payment or distribution is made to you.


ITINs take 7 to 11 weeks to be obtained for international applicants. Currently, due to Covid delays, the timescales are many months (4 to 6 months as of September 2020).


I inherited an IRA from my late family member in the US


IRAs (Individual Retirement Accounts) are the most common type of inheritance for a non US person. In all cases, the IRA provider will require claim paperwork completed which includes an ITIN being included.


Do I pay tax on an IRA?


There is a Tax treaty in place with most countries. As an example the UK/US treaty allows no US tax to be paid where an annuity is taken. You would just pay tax in the UK on the regular annuity income received. However where a lump sum is taken, the US gets to tax the monies.


Lump sums are taxed at graduated income tax rates of between 10% and 37%. A US tax return (1040NR), would need to be filed if you have not paid the tax already or if you are trying to claim back excess tax paid. Normally the payor will withhold 30% as a flat withholding amount. In many cases, this will be higher than what was due, therefore requiring a tax refund claim for the excess tax paid.


Client Testimonial - another example case study - we assisted an elderly gentleman obtain a US inheritance


Just Breve assists many beneficiaries in this scenario and we successfully obtain ITINs from them. As part of the process we will provide the template letter wording required from you to attach to the application for the ITIN. This letter has to be provided the US IRA provider before the ITIN application can be mailed off.


Just Breve are a London based Certified acceptance Agent (CAA) and we will be able to assist with both the ITIN application and subsequent US tax return filing (if required). We are able to assist face to face or remotely via video call if required.


As an Enrolled Agent, Just Breve are experienced as a US tax accountant in London to assist with US tax preparation and US tax refund claims for non US persons.


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