Inheritance From Russia to the USA: Tax and Transfer Rules 2026
From Brighton Beach to Sunny Isles the same call comes every week: a parent in Russia has died, and an apartment or a deposit awaits an heir in the USA. It sits at the crossing of US tax law, Russian law, and the sanctions wall.
Do I Owe US Tax on an Inheritance From Russia?
Generally no. The US has no federal inheritance tax on the recipient, and under IRC Section 102 an inheritance is excluded from gross income — the IRS confirms this on its Gifts from Foreign Person page. A foreign bequest is a reporting event, not a taxable one. Two caveats: income earned after you inherit (interest, rent, gains) is taxable on Form 1040; and under IRC Section 1014 inherited property, foreign real estate included, takes a stepped-up basis equal to market value at death.
What Is Form 3520 and When Does the $100,000 Threshold Apply?
If bequests from a nonresident alien or foreign estate exceed $100,000 in one tax year, you file Form 3520, Part IV (IRS instructions). It is an information return — no tax is due; it follows your tax-return deadline (with extensions) but is mailed separately; amounts over $5,000 are itemized. The penalty for silence: 5% of the bequest per month, capped at 25% (IRC Section 6039F).
| Form | When required | Penalty |
|---|---|---|
| Form 3520, Part IV | Foreign bequests over $100,000 per year | 5% per month, max 25% |
| FBAR (FinCEN 114) | Foreign accounts over $10,000 aggregate at any point in the year | Up to $16,536 non-willful (2025-adjusted, per report) |
| Form 8938 (FATCA) | US residents: over $50,000 single / $100,000 joint at year-end ($75,000 / $150,000 anytime) | From $10,000 |
| FinCEN 105 (CMIR) | Over $10,000 in cash across the US border | Undeclared cash can be seized |
How Do You Move the Money Out of Russia in 2026?
Sberbank has been under full US blocking sanctions since April 6, 2022, and VTB since February 24, 2022 (Executive Order 14024): a direct wire to a US account is impossible. What works:
- Personal remittances are not banned. OFAC confirms noncommercial personal remittances are not prohibited; the hard part is finding a bank to process them.
- General License 50 (August 19, 2022) lets you close a personal account at a blocked Russian bank and move the balance out — see OFAC FAQ 1080.
- Third-country routes: open an account in person in Armenia (Ameriabank), Kazakhstan (Halyk Bank), or Georgia (TBC) and wire onward to the US.
- Russian currency limits change every six months. The Central Bank lifted its $1,000,000-per-month cap for Russian citizens on December 8, 2025, but kept restrictions for "unfriendly-country" non-residents through December 7, 2026; transfers without opening an account stay capped near $10,000 per month.
Keep the notarial inheritance certificate, a certified English translation, and every wire receipt: the US bank's compliance team will ask.
What Does the Russian Side Require?
Under Article 1154 of the Russian Civil Code an heir must accept the inheritance within 6 months of the date of death via a notary at the deceased's last residence. From the US:
- Issue a power of attorney — at a Russian consular office, or via a US notary plus apostille and certified translation.
- Your representative files the acceptance application within 6 months.
- After 6 months the notary issues the certificate of inheritance right.
- Russia abolished inheritance tax in 2006; the notary fee is 0.3% (max RUB 100,000) for children, spouses, parents, and full siblings — 0.6% (max RUB 1,000,000) for others.
Selling the inherited apartment? The Russian ownership clock starts at death: hold 3 years and the sale is exempt even for non-residents (extended to them in 2019); sell earlier and Russia taxes a non-resident at 30% with no deductions.
Which States Charge Inheritance Tax in 2026?
Only five: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania (Iowa's tax ended for deaths on or after January 1, 2025). The key point: inheritance tax follows the decedent's residence and in-state property, not the heir's. A New Jersey resident inheriting from a mother who lived and owned everything in Russia generally owes zero NJ inheritance tax; Pennsylvania works the same way.
Did the US-Russia Tax Treaty End?
It was suspended, not terminated. The US confirmed suspension of Articles 5-21 and 23 of the 1992 treaty effective August 16, 2024 (Treasury press release). Bequests were never treaty-governed, but dividends, interest, and rent lose treaty rates; 30% statutory withholding applies to US-source payments to Russian residents. The IRC Section 901 foreign tax credit is domestic law and survives.
Illustrative Case: Vadim From Edison, NJ
An illustrative composite, not a real client. Vadim, 44, a green-card holder in Edison, NJ 08817, lost his mother in Samara in March 2026: an apartment worth about RUB 8.5 million plus RUB 3.2 million at a non-sanctioned regional bank. A consular power of attorney let his cousin file with the notary in month two; the fee came to 0.3% — about RUB 35,000. Vadim will hold the apartment 3 years to avoid the 30% non-resident tax, routed the deposit through an Armenian account opened in Yerevan, and — since the total passed $100,000 — Form 3520 goes in with his 2026 return. US tax on the inheritance itself: $0.
Inherited money usually becomes the down payment, the college fund — and, often for the first time, a serious look at life insurance. SafeBridge Insurance walks Russian-speaking families in NJ, NY, and FL through that step in their own language — (315) 871-0833.
General information, not tax, legal, or sanctions advice. OFAC rules and Russian currency limits change often — verify current requirements with a licensed professional.
Frequently Asked Questions
Do I pay US tax on money inherited from Russia?+
No federal income tax — IRC §102 excludes inheritances from income. You only report on Form 3520 if the year's total from the foreign estate exceeds $100,000.
What is the penalty for filing Form 3520 late?+
5% of the bequest per month late, capped at 25% (IRC §6039F). On a $200,000 inheritance that is up to $50,000 — for a form that carries no tax.
Can Sberbank wire my inheritance to a US bank?+
No. Sberbank is fully blocked since April 6, 2022, VTB since February 24, 2022. Use a non-sanctioned bank, OFAC General License 50, or a third-country account.
Is it legal to receive money from Russia in the USA?+
Yes. OFAC guidance says noncommercial personal remittances to or from Russia are not prohibited; the challenge is compliant banking channels and documentation.
What is the deadline to accept an inheritance in Russia?+
6 months from the date of death (Article 1154, Russian Civil Code). From the US you act via a power of attorney — consular or apostilled with a translation.
Do I file an FBAR if I open an account in Russia or Armenia?+
Yes, once all foreign accounts together exceed $10,000 at any moment in the year — FinCEN Form 114. Non-willful penalty runs up to $16,536 per report.
Does New Jersey tax my inheritance from Russia?+
Generally no. NJ inheritance tax targets NJ-resident decedents and NJ property. A bequest from a Russian decedent to an NJ heir is normally outside its reach.
Is the US-Russia tax treaty still in force in 2026?+
It is suspended, not terminated: Articles 5-21 and 23 stopped applying on August 16, 2024. The IRC §901 foreign tax credit still works as US domestic law.