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ITIN NEWS BLOG

News & Tips from an ITIN Acceptance Agent

ITINs and Inheriting money from a US estate


ITINs and Inheriting money from a US estate
Just Breve - ITINs and Inheriting money from a US estate

Are you the beneficiary of a US persons retirement account / pension (i.e. a 401(k) or IRA)?


If so, the US payor (e.g. Goldman Sachs / Fidelity / Charles Schwab / TD Ameritrade etc) may require you to obtain an ITIN before they distribute funds to you.


If they have asked you to obtain an ITIN, Just Breve can assist with the process.


Why am I being asked for an ITIN?


Before payment can be made to you, the US payor requires an ITIN as all transactions of this nature are reported to the IRS. A US tax identification number is used for this purpose.


Can I fill in a W-8BEN so I don't pay US tax?


If you are taking an annuity, then yes you can. For instance under the US/UK tax treaty the amount for an annuity is tax free in the US and you will just pay tax in the UK on the income received.


If taking a lump sum however, you will pay tax in the US first and it is tax free in the UK. A W-8BEN for this purpose is irrelevant other than to declare your country of residence on it.


I received a lump sum payment and they deducted 30% tax from me


Where lump sums are concerned, you may find the payor is risk averse and therefore will hold the maximum tax amount of 30% for a non resident. This does not mean this is what is owed.


You will owe tax at graduated income tax rates for the US which start at 10% and work up to 37% (with varying rates in between). Therefore if 30% has been held, you may be due a refund from the IRS.


The US payor will issue a 1042-S document to you to show the gross amount and US tax withheld. Keep this safe, you'll need it to reclaim the tax overpaid.


Can you help with me obtaining a refund?


Yes Just Breve can assist, we do so regularly for individuals who have received a lump sum payment from the US for an inheritance. We will need the 1042-S issued to you for the gross amount and the tax held.


We will then prepare the Form 1040NR US tax return and apply for an ITIN (if you do not already have one). Refunds can take 6 to 12 months plus to be received, depending on how busy the IRS is (especially in Covid times).


We assist clients in the United Kingdom and any other country that has a tax treaty with the USA. All work is performed by email (secure portal) and video call. Any documents sent to the IRS will require originally inked signatures and paperwork will need to be mailed back to us for this. Any questions or if you need help with obtaining a refund from the USA:


T: 0208 1444632



Fixed fee service.

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