Foreign inheritance tax and tax credit

[MurielMA]

My mom, a resident and citizen of France, passed away last summer. My inheritance will consist of some cash and mostly stocks/shares. There is no real estet involved. An attorney there is taking care of the necessary steps. The first thing I had to do was pay the ineritance taxes due, which I did late last year, in November or December.  This was in the low  five figures, which had quite an impact on my bank accounts. I haven't seen any money yet.

 
Working on my 29020 taxes, I looked up the foreign tax credit, but it says that only applies to foreign income.  It wasn't really clear whether that meant any income or just earnd income, or what. I also found form 706-CE, Certificate of Payment of Foreign Death Tax. Is that what I need to file?  It looks like I would have to send the form to both the attorney and the French department of the Treasury for their signatures. Considering the time this is taking, I doubt I would bet it back before the tax deadline. Would I be able to claim the credit with my 2021 taxes, when I declare the inheriitance itself, (which I hope I will have received by then) even though I paid the tax in 2020?

[ToddL99 · Accepted solution]

The French tax you paid on your foreign inheritance does not qualify for a foreign tax credit.

A foreign tax credit only applies when you have foreign income that is subject to U.S. tax. There is no U.S. federal tax on inheritances.

There are some states that have an inheritance tax, but they only apply to domestic assets - not foreign assets.

[MurielMA]

Thank you so much for your explanation. My expectations werenot great, as I knew that the inheritance I will eventually get is not taxable in the US, so the US government doesn't really owe me anything. But it was worth a try. Thanks again.

Just out of curiosity, whar is Form 706-CE for?

[DaveF1006]

It depends. According to this IRS link, form 706CE "is used by the executor of  a decedent’s estate must file this form before the IRS can allow a credit for foreign death taxes claimed on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return."