Definition of Nonresident Alien (NRA)
Different from nonresident alien for the income tax purpose, under gift tax regulations, a “resident” is a person who has his domicile in the United States. A person acquires a domicile in a place by living there, for even a brief period of time, with no definite present intention of later leaving that place. A person’s residence will not qualify as a domicile unless the person has the requisite intent to remain in such residence indefinitely. An intention to change domicile will not generate such a change unless accompanied by actual removal; intent to leave is not sufficient.
An individual who is present in the United States on a non-immigrant visa can be considered a resident for gift tax purposes if the individual wants to permanently remain in the United States even though the visa does not allow permanent residence.
Because the determination of a person’s “domicile” relies upon the intent of an individual, a bright-line test to determine if an individual is a resident for federal gift tax purposes is not available. Therefore, the courts consider the following factors in making such a determination: visas, work permits, location of business and property interests, family immigration history, residential property, individual testimony, motivation, duration of stays in theUnited States, and community group affiliations.
The gift tax for resident aliens follows the same rules and regulations as do the gift of U.S. citizens to determine gift tax liability. However, the gifts of nonresident aliens are taxed differently.
US Gift Tax for NRA
According to I.R.C. Section 2501(a); Regulation §25.2501-1, a nonresident alien is subject to gift tax on transfers of real and tangible property situated in the United States. There are differences in the foreign gift tax treatment of cash and property. Treatment of property for estate tax purpose is listed for comparison.
| Item |
Gift tax |
Estate tax |
| Cash in US bank/brokerage account |
Yes |
No |
| Bank deposits |
No |
No |
| US bonds |
No |
Yes |
| Non-US government bonds |
No |
No |
| U.S. stocks |
No |
Yes |
| Interest in US partnership/LLC |
No |
Yes |
| Real estate property |
Yes |
Yes |
| Art and other Tangible personal property in US |
Yes |
Yes |
| Life insurance policy of NRA |
No |
No |
| Annuities |
No |
Yes |
| Retirement plan |
No |
Yes |
Annual Gift Tax Exclusion
nonresident aliens are entitled to annual exclusion for gifts of up to $15,000 per donee, unlike U.S. citizens, nonresident aliens cannot “split gifts” with their spouse (and thus effectively double their annual gifts). There is no unlimited marital deduction for gift tax purpose for property flowing to a non-citizen spouse. In fact, such gifts are currently capped at $136,000 in 2011, indexed for inflation.
| Year | Annual gift Exclusion (Nonspouse) |
Annual gift exclusion (nonresident spouse) |
Annual gift exclusion (Spouse resident) |
Applicable Exclusion Amount |
| 2015 |
14,000 |
147,000 |
Unlimited | 5,430,000 |
| 2016 |
14,000 |
148,000 |
Unlimited | 5,450,000 |
| 2017 |
14,000 |
149,000 |
Unlimited | 5,490,000 |
| 2018 |
15,000 |
152,000 |
Unlimited | 11,180,000 |
| 2019 |
15,000 |
155,000 |
Unlimited | 11,400,000 |
| 2020 |
15,000 |
157,000 |
Unlimited | 11,580,000 |
| 2021 |
15,000 |
159,000 |
Unlimited | 11,700,000 |
| 2022 | 16,000 | 164,000 | unlimited | 12,060,000 |
| 2023 | 17,000 | 175,000 | unlimited | 12,920,000 |
| 2024 | 18,000 | 185,000 | unlimited | 13,610,000 |
| 2025 | 19,000 | 190,000 | unlimited | 13,990,000 |
Lifetime gift and estate Tax Exemption
If an individual gifts an amount that exceeds the annual gift tax exclusion, a gift tax return will be required to report the gift. Howerer, This does not automatically trigger gift tax. The gift tax only applies to gift amounts that exceeding the lifetime exclusion limit, which is $13,610,000 fo the 2024 tax year. The portion of the gift over the annual exclusion will reduce the amount that may leave at death estate tax exemption. For a married couple, because of the unlimited marital deduction available for property passing between U.S. citizen spouses, RC section 2010(c)(4) allows the surviving spouse to apply the deceased’s unused exemption amount to their own transfers during life and at the time of one’s death. This new ability to increase the surviving spouse’s applicable exclusion amount by the unused exclusion amount of the deceased spouse has been described by estate planners as the “portability of unused exclusion between spouses.” The estate of a deceased taxpayer (survived by a spouse) can make this portability election [section 303(a) of the Tax Relief by timely filing estate tax return and properly calculating the Deceased Spousal Unused Exemption (DSUE). The executor will be required to file a timely estate tax return to make the required election so that the decedent’s unused exclusion amount will become portable. The need to timely file an estate tax return to make the election even the estate of the first spouse to die will be less than the amount required to file an estate tax return. evenue Procedure 2022-32 states that the executor of the deceased’s estate can only apply for the portability election under the following circumstances:
- The deceased died after 12/31/2010.
- The deceased was a citizen or resident of the United States at death.
- The estate was not required to file an estate tax return based on the gross value of the estate and adjusted taxable gifts.
the executor of an estate was required to elect portability within nine months of the date of death of the deceased, or the last day of the period covered by a granted extension. Revenue Procedure 2022-32 allows certain taxpayers an extended amount of time to make a “portability election” on or before the fifth anniversary of the taxpayer’s death.
As the U.S. citizens and residents, nonresident alien can claim the annual exclusion per donee. A gift to a noncitizen spouse is not eligible for the unlimited marital deduction. However, gifts to noncitizen spouses are eligible for an increased annual exclusion($190,000 for 2025). Unlike U.S. citizens and resident aliens, nonresident aliens are allowed a $60,000 exemption for transfer tax at death only. This exemption may be applied estate tax only. It cannot be used to offset U.S. gift tax.
US Gift Tax for US persons vs non US perosn
| To: US Citizen | To: US Resident | To: Non Resident Alien | |
| From: US Citizen | Spouse: Unlimited Marital Deduction Nonspouse: Annual Exclusion Amount Lifetime Exemption Amount | Spouse: Annual Exclusion Lifetime Exemption Amount Nonspouse: Annual Exclusion Lifetime exemption Amount | Spouse: Annual Exclusion Amount Lifetime exemption Amount Nonspouse: Annual Exclusion Amount Lifetime exemption Amount |
| From: US Resident | Spouse: Unlimited Marital Deduction Nonspouse: Annual Exclusion Amount Lifetime exemption Amount | Spouse: Annual Exclusion Amount Lifetime exemption Amount Nonspouse: Annual Exclusion: Amount Lifetime exemption Amount | Spouse: Annual Exclusion Amount Lifetime exemption Amount Nonspouse: Annual Exclusion Amount Lifetime exemption Amount |
| From:Non-Resident Alien (US Situs Property) | Spouse: Annual Exclusion Amount Lifetime exemption Amount Nonspouse: Annual Exclusion Amount No Lifetime exemption Amount | Spouse: Annual Exclusion No lifetime exemption Amount Nonspouse: Annual Exclusion Amount No lifetime exemption Exclusion Amount | Spouse: Annual Exclusion No lifetime exemption Amount Nonspouse: Annual Exclusion Amount No lifetime exemption Exclusion Amount |
Gift and Estate Tax Rate
The gifts are taxed at the same rates that apply to U.S. citizens. Just like your federal income tax, the gift tax is based on marginal tax brackets. And rates range between 18% and 40%. If you want to calculate the taxable income for gifts exceeding the annual exclusion limit, the table below breaks down the rate that you will have to pay based on the value of the gift.
| 2021 Gift Tax Rates | |
| Gift Value Above the Annual Exclusion Limit | Rate |
| Up to $10,000 | 18% |
| $10,001 to $20,000 | 20% |
| $20,001 to $40,000 | 22% |
| $40,001 to $60,000 | 24% |
| $60,001 to $80,000 | 26% |
| $80,001 to $100,000 | 28% |
| $100,001 to $150,000 | 30% |
| $150,001 to $250,000 | 32% |
| $250,001 to $500,000 | 34% |
| $500,001 to $750,000 | 37% |
| $750,001 to $1,000,000 | 39% |
| More than $1,000,000 | 40% |
Reporting Gift Tax
According to the IRS, if you are an un-domiciled alien who made a gift subject to foreign gift tax, you must file a gift tax return (Form 709) if:
- You gave any gifts of future interests,
- Your gifts of present interests to any person other than your spouse total more than $15,000 (2021) per year, or
- Your gifts to your non-US citizen spouse total more than $159,000 (2021) per year