Estate Tax for Nonresidents not Citizens of the United States

For estates of decedent nonresidents not citizens of the United States, the Estate Tax is a tax on the transfer of U.S.-situated property, which may include both tangible and intangible assets owned at the decedent’s date of death. The computation of the tax requires that you state the total value of assets situated in the United States, and generally requires a separate statement of the total value of assets situated outside the United States. The two totals are the “gross estate in the United States” and the “gross estate outside the United States.” Property includible in these two totals may consist of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets. To value the assets held at the date of death, the fair market value is used, not necessarily what was paid for them or what their values were when they were acquired. See the Instructions for Form 706 for additional information on property includible in the gross estate and its valuation for estate tax purposes.

To arrive at the “taxable estate,” certain deductions are allowed if properly documented. These deductions may include funeral and administration expenses, claims against the estate, unpaid mortgages and liens, and certain uncompensated losses. Charitable and marital deductions are subject to additional limitations, which are found in the Instructions for Form 706-NA.

To the taxable estate, add the value of lifetime taxable gifts, beginning with gifts made in 1977, of tangible or intangible property located in the United States that was transferred directly or indirectly, and not included in the gross estate.

If the date of death value of the decedent’s U.S.-situated assets, together with the gift tax specific exemption and the amount of the adjusted taxable gifts, exceeds the filing threshold of $60,000, the executor must file a Form 706-NA for the decedent’s estate. The filing threshold for Form 706-NA is not indexed for inflation. See the Instructions for Form 706-NA for additional information on the gift tax specific exemption and the amount of adjusted taxable gifts.

The Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return Estate of nonresident not a citizen of the United States, if required, must be filed within 9 months after the date of death unless an extension of time to file was granted. Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, is used to request an extension.


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