For estate tax purposes, a person is a “resident decedent” if the person is “domiciled” in the U.S. at the time of his or her death. The estates of resident aliens follow the same rules and regulations as do the estates ofU.S.citizens to determine estate tax liability. However, the estates of nonresident aliens are taxed differently.

U.S. estate tax for NRA

while U.S persons are subject to estate and gift tax on their worldwide assets, nonresident aliens are subject to estate and gift tax only on assets that are considered U.S. situs property. However, the situs rules are different for gift tax and estate tax purposes.

The estate tax exclusion for nonresident aliens is only $60,000. (Contrast to the estate tax exclusion for U.S. persons of $5,250,000). The estate tax rate is 40%. However, an unlimited marital deduction is available when a non-citizen leaves U.S. property to a U.S. citizen surviving spouse. When the assets are transferred to a non-citizen the same unlimited marital deduction is available only if the property is transferred into a “qualified domestic trust” (“QDOT”) for the benefit of the non-citizen.

Form 706-NA

Form 706-NA is used to calculate U.S.federal estate taxes for the estates of nonresident, alien decedents. The executor must file Form 706-NA if the date of death value of the estate located in the United States exceeds the filing limit of $60,000. The total value of the gross estate may be reduced by the sum of:

• The gift tax specific exemption (section 2521) allowed for gifts made between September 9, 1976, and December 31, 1976, inclusive, and
• The amount of adjusted taxable gifts made after December 31, 1976.

Typically Form 706-NA must be filed within nine months after the decedent’s date of death.