Did you know that the estate of an Irish Citizen may have exposure to U.S. Federal Estate Tax if it includes U.S. situs assets.

Assets

These assets may include:

• U.S. Real Estate
• Shares in U.S. Corporations
• Tangible property located in the U.S.
• Intangible assets such as patents or copyright

Threshold

1. If the value of the U.S. assets exceeds $60,000 then potentially U.S. Taxes will apply
2. This threshold applies to non-U.S. domiciled individuals
3. The threshold for U.S. domiciled individuals is $13.9m

Double Taxation Agreement

However, the Ireland-U.S. Double Taxation Agreement (DTA) on estate and gift taxes may provide relief to avoid double taxation. For example:

• Taxing Rights: The U.S. has the primary taxing rights over U.S. situs assets. If the deceased is not domiciled in the U.S., only the U.S. situs assets are subject to U.S. estate tax.
• Credit for U.S. Tax Paid: If the Irish resident beneficiary is subject to Irish Capital Acquisitions Tax (CAT) on the inheritance, they may be able to claim a credit for U.S. estate tax paid on the same assets under the DTA.

It is important to note that the U.S. estate tax rates are progressive, and the tax liability depends on the value of the U.S. situs assets. Additionally, there may be exemptions or deductions available under U.S. law.

Filing deadlines

US taxes must be filed within 9 months after the date of death. This is faster than Irish dates which mostly relate to date of grant of probate.

This may cause cashflow issues and estate assets may need to be sold to pay the liability.

The estate will also need to get a US tax identification number.

The executors are unlikely to have expertise in filing US taxes. We can refer a registered IRS filing agent to assist.

Planning

It may be a useful exercise for an individual with U.S. assets to examine the implications for their estate planning, in order to manage/avoid any possible exposures for beneficiaries.

Many investors have US assets in their portfolios. It is therefore wise for solicitors and accountants to identify this at the earliest stage of the administration.

We would be happy to advise in this regard.

Did you know

We have a dedicated site for filing IT38 Returns, simplifying your dealings with Revenue, ensuring your compliance and providing you with peace of mind: https://inheritancetaxreturns.ie/

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