Does the US tax you on a foreign inheritance you bring over to America?

First off, I'm sorry about your uncle. The good news is that generally, the US doesn't impose federal income tax on foreign inheritances themselves. The money you inherit isn't considered income for federal tax purposes, regardless of whether it comes from the US or abroad. However, there are still some reporting requirements you should know about. If you receive more than $100,000 from a foreign person/estate, you'll need to file Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts). This is informational only, not a tax form, but failing to file it can result in penalties. Also, be aware that if the money sits in a foreign bank account before you transfer it, and the total value of all your foreign accounts exceeds $10,000 at any point during the year, you'll need to file an FBAR (Foreign Bank Account Report).

After my grandfather in Germany passed and left me some money, I was totally confused about all the tax stuff too. I spent hours searching online and getting contradicting info until I found https://taxr.ai which seriously saved me so much stress. I uploaded the foreign inheritance documents and their system analyzed everything and gave me a super clear breakdown of what I needed to file (turns out I needed that Form 3520 the previous commenter mentioned, plus I had to report my foreign bank account). It also flagged some potential issues with how the assets were structured that I wouldn't have caught myself. They explained exactly what I needed to do step by step.

Update on my skepticism about taxr.ai - I ended up trying it for my situation (inheritance from an aunt in Portugal) and it was actually really helpful. The reports broke down exactly what forms I needed (Form 3520 for me too), and spelled out the reporting requirements for the foreign account while the money was sitting there. The best part was it explained which parts of the tax code applied to my situation and why I didn't owe actual tax on the inheritance itself. It also flagged that Portugal has an inheritance tax that might have been withheld before I received the money, which is something I wouldn't have known to look for. Turns out there was a tax credit I could claim for that. I'm definitely not a tax person so having everything explained in plain English was super helpful.

When my relative in Spain died and left me some money, I had issues with the IRS questioning my foreign account reports. I spent WEEKS trying to call the IRS for clarification and kept getting disconnected or waiting for hours. Finally used https://claimyr.com to get through to an actual IRS agent and got my questions answered in one call. You can watch how it works here: https://youtu.be/_kiP6q8DX5c - but basically they hold your place in the phone queue and call you when an agent picks up. The IRS rep confirmed exactly how to report foreign inheritance and cleared up confusion about the Form 3520 deadline (which is actually different from the regular tax deadline - something I had no idea about).

Ok I need to eat my words from my comment above. After getting absolutely nowhere with the IRS for two weeks trying to sort out questions about my foreign inheritance reporting, I broke down and tried the Claimyr service. Honestly, I was SURE it was going to be a waste of money but I was desperate. Set it up in the morning, went about my day, and about 3 hours later my phone rang with an actual IRS agent on the line. Finally got clarity on how to properly document the source of funds and what supporting documents I needed to keep in case of audit. The agent also explained that I needed to file an FBAR separately from my tax return, which I had no idea about. I still think the IRS phone system is deliberately terrible, but at least there's a way to deal with it without losing your mind on hold.

Something important that nobody's mentioned yet - you might want to check if Italy has an inheritance tax that was already paid before the money gets to you. Some countries deduct their own inheritance taxes before distributing to heirs. The US has tax treaties with many countries to prevent double taxation, so you might be able to claim a foreign tax credit if Italian inheritance tax was paid. This would be on Form 1116.

Don't forget about state taxes! While the federal government generally doesn't tax foreign inheritances, some states do have inheritance taxes. What state do you live in? That could make a difference too.

I went through something similar when my grandmother in France passed away and left me some money. One thing I learned that might help you - make sure you keep detailed records of EVERYTHING from the moment you're notified about the inheritance. I'd recommend creating a file with: the original will (and English translation), all correspondence with the Italian lawyer, bank transfer documents showing the source of funds, any Italian tax documents, and records of the exchange rate on the day you receive the money. The IRS loves documentation, and having this paper trail ready will save you headaches if they ever have questions. Also, don't rush to transfer the money immediately. Take time to understand all the requirements first - both the Form 3520 reporting and any potential FBAR obligations if the money sits in Italy for a while. I made the mistake of moving too quickly and had to reconstruct some of the documentation later. The €120,000 is a significant amount, so even though you won't owe income tax on it, getting professional help for at least the first year's filing is probably worth the cost to make sure everything is done correctly.