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I am a Green Card resident in Nebraska USA, and I am a UK citizen. Is it correct that I need to report to the USA Government if I inherit more than $10,000 from my father’s Will (he too was a UK citizen)? I have reported it to HMRC and because the inheritance is under the threshold, there are no taxes due in the UK.

I’m not sure if I’m reading Google correctly, but it appears that I would not be liable to pay US tax on this inheritance – however, it appears that some states (including Nebraska) do regard any inheritance as taxable at 18%.

Could anyone please help clarify this for me? This is so confusing!

Do I need to file the forms FBAR and 3520?

Very many thanks for any advice or information.

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  • If your inheritance includes cash/securities totaling 10,000USD (equivalent) or more and you leave it in an overseas account then you will have to file an FBAR. There are penalties if you are found to have not filed an FBAR when you were supposed to. But this doesn't necessarily mean you will owe taxes on any portion of the amount reported. That is determined separately and there are a number of factors involved (total amount inherited, where you live, etc.) – CactusCake Jul 23 '18 at 22:07
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Yes, you need to file a 3520 if the amount bequeathed to you was over $100k USD, however it should not incur a (federal) tax burden.

You will not need to submit an FBAR unless you have foreign accounts over the threshold. So if you have more then $10K USD in your UK account(s), then yes, file the FBAR. Note that the FBAR requirement has nothing to do with the inheritance per se, it's required only if you have a foreign account open with more than $10k in it.

Nebraska has specific limits for inheritance taxes. If your father was not a Nebraska resident when he passed, then I believe you are not taxed on the inheritance. I'd like to see another comment or answer to support this part of my answer. Supporting info:

The Nebraska inheritance tax applies to persons who die while residents of the state or, regardless of state of residence, who die owning real property located in Nebraska. [ ... ] The inheritance tax is administered by the county court of the county in which the decedent resided or in which his or her real property is located.

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I am not a lawyer (IANAL) but the US (Federal) government exempts the first half million (+/- $250k). That's why you don't owe the Feds.

States can tax you separately. (+counties, +cities/towns/etc.)
The percentage you are taxed on might be after an exemption (I see an exemption on the first $40k).

Check with a tax CPA in Nebraska, you may have options since it is from out of the country (like not realizing it until you convert it to dollars, or until you bring it to the US).

Also, for what it is worth, I don't see your 18% figure anywhere.
I see a 1% rate in NE for a child after your $40k exemption.
Ref: nolo.com/.../nebraska inheritance tax

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