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Originally Posted by golf2000 If I put my sister (who neither is a US-citizen nor holds a US immigrant-visa) as my primary beneficiary in my estate (retirement/brokerage accounts, social security, home etc.), what are the steps that need to be taken to ensure that she would be able to legally and seamlessly claim in the event of my pass-away? Thank you. |
As estate exists until the final distribution of its assets to the heirs and other beneficiaries; If you are the beneficiary of an estate that is engaged in a trade or business in the US, you are treated as being engaged in the same trade or business. Every domestic, I mean US, estate with gross income of $600 or more during a tax year must file a Form 1041. Also as you said, aslongas one or more of the beneficiaries of the domestic estate are nonresident alien individual(s), the personal representative needs to file Form 1041, even if the gross income of the estate is less than $600.The personal representative must file a separate Sch K-1 of Form 1041, or an acceptable substitute for each beneficiary;also, the representative must show each beneficiary's taxpayer identification number. A $50 penalty is charged for each failure to provide the identifying number of each beneficiary unless reasonable cause is established for not providing it. A nonresident alien beneficiary that gives the representative a withholding certificate generally must provide representative with a TIN. The representative may have to file the income tax return ,Form 1040NR , and pay the tax for a nonresident alien beneficiary. Depending upon a number of factors, the representative may or may not have to file Form 1040NR for the nonresident alien beneficiary.
However, the representative does not have to file the nonresident alien's return and pay the tax if that beneficiary has appointed an agent in the US to file a federal income tax return. However, the representative must attach to the estate's return , Form 1041, a copy of the document that appoints the beneficiary's agent.The representative also must file Form 1042 and Form 1042-S to report and transmit withheld tax on distributable net income actually distributed. This applies to the extent the distribution consists of an amount subject to withholding.
You also must file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, and Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, to report and transmit withheld tax on distributable net income actually distributed. This applies to the extent the distribution consists of an amount subject to withholding. income or deductions of a trust or estate can be either tax-favorable or unfavorable to foreign beneficiaries, depending on the type of income or expense involved. Sales of U.S. real property by trusts or estates can create undue tax burdens for foreign beneficiaries. I guess it is not so simple to write about it here so you need contact a IRSEnrolled Agent/ a CPA for more info in detail