All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Registered: ‎05-10-2018

Inherited IRA and Guaranteed Income Annuity W-8BEN Form Help!!!

Hello,

 

I am hoping someone here can help me with this.

 

I had a family member recently pass away and I will inherit half of their two (2) traditional IRA funds and half of their guaranteed income annuity fund. I am not a USA tax payer. I am resident and tax payer in the United Kingdom. I want to transfer the traditional IRAs into inherited IRAs. I want to take a lump sum payment from the guaranteed income annuity fund.

 

The Annuity company and traditional IRA company need me to send in W-8BEN as part of the forms for inheritance. I need to put down a withholding rate on those forms and its kind of tricky to figure out what the rate is.

 

As far as I can ascertain the withholding rate for the lump sum annuity is 30%. And I from reading the UK-US taxation treaty under chapter 17 section 1 the withholding rate for inherited IRAs is 0% as there is 0% tax, and reading the websites of companies that offer inherited IRAs there is no immediate income tax impact.

 

I will then file the 1040NR tax form to get any refund owed to me from the 30% withholding on the lump sum annuity, and I may also close the inherited IRAs and withdraw the funds and thus include any taxes on that withdrawal.

 

Does anyone know if this is correct? Am I making some horrible mistake?

 

Thank you.

 

SIgned - clueless Brit.