An American heir who has just been through an Italian succession declaration is usually relieved to hear that the United States does not tax inheritances as income. That relief is correct, and it is also where most people stop reading — which is the problem. The inheritance itself is not taxed, but three separate reporting obligations can switch on the moment Italian assets reach you, and each one is a filing requirement, not a tax, which is exactly why people miss it: there is no tax bill to prompt them to ask.
The one reassuring fact, stated plainly
A bequest or inheritance received from a foreign estate is not gross income under US tax law. You do not add the value of an inherited Italian apartment, or the cash that lands in an Italian account, to your Form 1040 income. What follows below are disclosure obligations that exist independently of that fact, triggered by what you now hold or have received — not by any tax owed on it.
FBAR: the Italian bank account itself
If the estate's cash passes through, or stays in, an Italian bank account in which you have a financial interest or signature authority, and the combined value of all your foreign accounts exceeds USD 10,000 at any point in the year, you must file FinCEN Form 114 — the Report of Foreign Bank and Financial Accounts, better known as the FBAR. It is filed separately from your tax return, electronically through FinCEN's own system, by April 15, with an automatic extension to October 15. A jointly held estate account, or one you can merely sign on behalf of co-heirs, still counts; the threshold looks at the combined high balance of every foreign account you have an interest in, not just the inheritance account alone.
Form 8938: the same account, a different threshold, a different office
FATCA requires many of the same foreign accounts to be reported a second time, on Form 8938, filed with your federal income tax return rather than with FinCEN. The threshold is higher and depends on where you live and how you file: for a single filer resident in the US, it is triggered above USD 50,000 on the last day of the year or USD 75,000 at any point during it; married filing jointly resident in the US, the figures double to USD 100,000 and USD 150,000. Americans resident abroad face considerably higher thresholds again. The two forms overlap in what they ask about but are not a substitute for one another — an account can clear the FBAR threshold and sit below the 8938 one, or the reverse, and each has to be checked on its own terms.
Form 3520: reporting the inheritance itself, not just the money
This is the form that catches people who assume "no tax" means "nothing to file." A US person who receives a gift or bequest from a foreign estate exceeding USD 100,000 in a year must report it on Form 3520, Part IV — even though, as above, none of it is taxable income. The threshold is aggregated across gifts from the foreign estate and related foreign persons within the year, so a smaller cash distribution and a separately valued share of real property can add up to a reportable total even if neither alone would cross the line. Form 3520 is filed by the due date of your income tax return, including extensions, but it is a standalone form, not an attachment folded into the 1040 itself.
The property is not a financial account — until it produces one
The Italian apartment or farmhouse you inherit is real property, not a financial account, so it does not itself sit on an FBAR or an 8938. What changes that is what the property does afterward: rental income deposited into an Italian account becomes a foreign account balance; proceeds from selling the property, if they pass through or remain in Italy, do the same. The property's value at the date of death is still what counts toward the Form 3520 threshold on the way in, even though it never appears on the account-reporting forms unless it is later converted into cash that is held abroad.
The basis step-up Americans often don't realize they have
One genuine piece of good news sits on the US side of this file. For federal tax purposes, inherited property — including Italian real estate — generally takes a cost basis equal to its fair market value on the date of death, the same stepped-up basis rule that applies to a US inheritance. If you later sell the Italian property, the taxable gain for US purposes is measured against that stepped-up value, not against whatever your relative originally paid for it decades earlier. Keep the valuation used for the Italian succession declaration; it is the same figure a US accountant needs to establish basis, and selling an inherited Italian property covers the Italian-side mechanics of that sale.
Why the paperwork matters more than the tax ever would
Because none of this generates a tax bill, it is tempting to treat it as optional. It is not. Penalties for a late or missing FBAR start in the thousands of dollars per violation and climb sharply if the omission is found to be willful. A late Form 3520 carries a penalty measured as a percentage of the unreported amount per month, capped at a large share of the total — on a six-figure inheritance, that cap alone can exceed anything the inheritance itself would have cost in tax under any other system. The IRS does offer relief for filers who can show reasonable cause, and streamlined procedures exist for some who are already behind, but relief has to be requested and justified — it is not automatic, and whether a particular case qualifies is a question for a US tax professional, not something to assume.
What to settle before the first transfer
Work out which of these three forms applies before, not after, money or title moves: identify every Italian account in which you have an interest, value the inheritance as a whole against the USD 100,000 Form 3520 threshold, and check the 8938 thresholds against your filing status and residence. A US accountant experienced in foreign reporting, working from the same valuation used for the Italian succession declaration, can usually clear all three in one pass. If the Italian side of the estate — the succession filing, the inheritance tax calculation, or the deed itself — is still open, a free consultation can address that part; the US filings above are a separate matter best handled by a licensed US preparer familiar with your full picture.