Form 706-NA: A Complete Guide for Nonresident Estate Tax Returns (2024)
When a person who lived outside the United States and wasn't a U.S. citizen passes away owning American property, their estate may need to file a special tax return. Form 706-NA is that return—a document that calculates federal estate taxes on U.S.-based assets owned by nonresident non-citizens at death. This guide breaks down everything you need to know in plain language.
What the Form Is For
Form 706-NA serves two primary purposes for estates of individuals who were neither U.S. citizens nor residents (called “nonresident not a citizen” or NRNC decedents):
Calculating Estate Tax
The form computes federal estate tax on property located in the United States that the deceased owned at death. This includes real estate, business interests, stocks in U.S. companies, bank accounts connected to U.S. businesses, and tangible property physically located in America. The tax applies to the transfer itself, not to what beneficiaries receive.
Computing Generation-Skipping Transfer (GST) Tax
If the deceased's estate includes trusts or transfers that skip a generation (for example, leaving assets directly to grandchildren instead of children), additional GST tax may apply, but only on U.S.-situated property.
The critical distinction between Form 706-NA and the regular Form 706 (for U.S. citizens and residents) is the dramatically lower threshold: NRNC estates must file if U.S.-situated assets exceed just $60,000, compared to millions for U.S. residents. This makes Form 706-NA relevant even for relatively modest American holdings.
The form requires executors to document all U.S. property, apply proper valuations, claim available deductions (funeral expenses, debts, charitable contributions, and certain marital transfers), and calculate the final tax bill. Notably, the unified credit available to NRNC estates is typically only $13,000, significantly less than the substantial exemptions U.S. citizens enjoy.
When You’d Use It (Late Filing and Amended Returns)
Standard Filing Deadline
Form 706-NA must be filed within 9 months of the date of death. For example, if someone passed away on March 15, 2024, the return would be due by December 15, 2024.
Extensions
If you can't meet the 9-month deadline, you can request an automatic 6-month extension using Form 4768. Simply check the “Form 706-NA” box in Part II. Executors located outside the country may request an additional extension by filing a second Form 4768 with a written explanation. Remember: extensions give you more time to file, not more time to pay.
Amended Returns
To submit corrections, file another Form 706-NA, check the box on line 12 indicating it's a supplemental return, attach a detailed statement explaining what changed, and include a copy of the original return.
When Filing Is Required
You must file if the deceased's U.S.-situated assets, plus any adjusted taxable gifts made during life, exceed $60,000 at the date of death. This threshold includes the fair market value of all U.S. property.
Key Rules for 2024
The $60,000 Threshold
This filing requirement applies to all NRNC estates where U.S.-situated assets exceed this amount.
What Counts as “U.S.-Situated”
Assets physically located in America (real estate, cars, artwork), stock in U.S. corporations, debt obligations from U.S. persons or governments, and business interests in U.S. trades all count. However, certain assets like foreign bank deposits or life insurance proceeds may be excluded.
The Unified Credit
Most NRNC estates receive only a $13,000 unified credit. Tax treaties with several countries may provide additional relief.
No Portability for Nonresidents
NRNC decedents cannot transfer unused estate tax exemptions to surviving spouses.
Expatriate Special Rules
Special valuation rules under Section 2107 may apply to former U.S. citizens or long-term residents.
Representation Requirements
As of 2024, you must use Form 2848 or Form 8821 to authorize representatives.
Estate Tax Closing Letters
These must be requested through Pay.gov ($56 fee). Alternatively, you can request free account transcripts.
Step-by-Step Filing (High Level)
Step 1 – Gather Documentation
Collect all death certificates, wills, appraisals, and relevant tax forms. Translate foreign documents into English.
Step 2 – Identify U.S.-Situated Assets
Determine which assets are considered U.S.-situated per IRS rules.
Step 3 – Value Everything at Fair Market Value
Use the date of death or alternate valuation method (6 months later) if it lowers the tax.
Step 4 – Complete Part I
Provide identifying details for the decedent and executor.
Step 5 – Answer Part III Questions
Address questions about citizenship, trusts, and insurance.
Step 6 – List Assets in Part V
Include all U.S. property with complete descriptions and valuations.
Step 7 – Calculate Part IV (Taxable Estate)
Document worldwide assets and allowable deductions.
Step 8 – Compute Part II (Tax Computation)
Apply the unified rate schedule and relevant credits or treaty benefits.
Step 9 – Attach Required Schedules
Attach supporting schedules and forms such as 8971 and 8833.
Step 10 – Sign, File, and Pay
Mail the completed return and pay electronically via IRS.gov/Payments.
Common Mistakes and How to Avoid Them
Mistake 1 – Assuming No Filing Is Required
Even non-U.S. citizens must file if U.S. assets exceed $60,000.
Mistake 2 – Using Original Purchase Price
Always use fair market value at the date of death.
Mistake 3 – Failing to Document Worldwide Assets
Worldwide asset reporting affects treaty-based credits.
Mistake 4 – Missing the 30-Day Basis Reporting Deadline
Form 8971 must be filed within 30 days of Form 706-NA submission.
Mistake 5 – Claiming Deductions Without Documentation
Provide invoices, bills, and supporting evidence for deductions.
Mistake 6 – Ignoring Tax Treaties
Treaties can reduce or eliminate estate tax; attach Form 8833 if applicable.
Mistake 7 – Substantial Valuation Understatements
Understating property value can result in penalties of up to 40%.
What Happens After You File
Immediate Processing
The IRS assigns an identification number and enters data.
Acceptance or Examination
Some returns are selected for audit; others are accepted as filed.
If Examined
An IRS agent may request additional documentation; a representative can respond on behalf of the estate.
Closing Documentation
You may request a closing letter or free transcript to confirm processing completion.
Transfer Certificates
These verify tax compliance for transferring U.S. real estate or securities.
Ongoing Obligations
Future sales of U.S. real property trigger Form 8288 filing and withholding requirements.
Statute of Limitations
The IRS typically has three years to examine returns; longer in cases of understatement or fraud.
Penalties
Late filing and payment incur monthly penalties; willful evasion can result in prosecution.
FAQs
Q1: My relative owned a vacation home in Florida worth $80,000 but lived in Canada their entire life. Do I need to file?
Yes. The Florida home exceeds the $60,000 threshold, requiring Form 706-NA. Treaty benefits may apply.
Q2: The deceased owned stock in Apple and Microsoft through a foreign brokerage. Is this U.S.-situated?
Yes. Stock in U.S. corporations counts as U.S.-situated property.
Q3: Can we deduct funeral expenses from abroad?
Yes. Foreign funeral and administration expenses are deductible with documentation.
Q4: The will left everything to a non-U.S. citizen spouse. Can we claim a marital deduction?
Not unless the property transfers to a Qualified Domestic Trust (QDOT) or under treaty provisions.
Q5: We missed the 9-month deadline. What should we do?
File immediately and pay penalties; explain reasonable cause in a statement.
Q6: The deceased gave up their green card seven years before death. Does this affect the tax?
Possibly, under Section 2107 rules for former long-term residents.
Q7: How long should we keep records?
Retain records for at least six years, longer for complex estates.
Final Thoughts
Form 706-NA ensures the U.S. can assess estate taxes on assets within its borders while offering limited relief through deductions and treaties. Because the filing threshold is low and penalties significant, careful preparation is essential. Executors should confirm valuation accuracy, meet deadlines, and consider professional guidance when necessary.
For complete instructions and current forms, visit IRS.gov/Form706NA or review Publication 559.
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