Form 706-NA (2016): Nonresident Estate Tax Checklist
This checklist serves as a practical reference for preparing Form 706-NA using the 2016 revision and instructions. It applies to U.S. estate tax and, when applicable, generation-skipping transfer tax for a decedent who was not a U.S. citizen and not a U.S. resident or domiciliary at death.
Form 706-NA focuses on U.S.-situated assets owned by nonresident alien decedents, though additional disclosure may be required to support deductions and treaty-based positions. Careful documentation and adherence to the 2016 instruction framework are essential for accurate filing.
Ten-Step Checklist for Form 706-NA (2016)
Step 1: Confirm nonresident noncitizen status at death
Confirm the decedent was not a U.S. citizen and not a U.S. resident or domiciliary for estate tax purposes at the date of death. This determination must be supported using federal estate tax standards rather than income tax residency concepts.
Documentation supporting nonresident alien status should be retained in case of IRS review.
Citizenship, domicile, and residency conclusions directly affect whether Form 706-NA is the correct estate tax return.
Step 2: Determine whether a filing requirement exists
Determine the date-of-death value of assets treated as U.S.-situated under federal estate tax rules. Compare that value to the filing thresholds described in the 2016 Form 706-NA instructions, commonly referenced as $60,000.
The filing conclusion should be documented even when the threshold is not exceeded. Filing considerations may still arise when deductions, treaty claims, or transfer tax disclosures are involved.
Step 3: Assemble required identification and probate documents
Gather the decedent’s death certificate and any probate documentation required under the instructions. If a will exists, confirm whether a certified copy must be attached or otherwise disclosed.
Executor or fiduciary identification details should be verified for accuracy before completing the return. Missing or inconsistent documentation often results in processing delays by the Internal
Revenue Service.
Step 4: Organize asset records by situs classification
Prepare a comprehensive asset inventory separating U.S.-situated assets from property treated as outside the United States. Situs determinations must follow federal estate tax rules rather than be based solely on asset location.
Maintain documentation supporting each classification, including brokerage statements and legal analyses, as needed. Clear organization supports accurate reporting of the gross estate and reduces audit risk.
Step 5: Complete Part I and establish the return structure
Complete Part I of Form 706-NA with accurate decedent and executor information, including country of citizenship. Ensure that identifying information aligns with supporting records and attached documents.
Before moving to schedules, confirm workpapers clearly map assets to the appropriate schedule. Consistent structure helps prevent misclassification errors later in the return.
Step 6: Report U.S.-situated real estate and securities
Report U.S. real property on Schedule A at fair market value as of the date of death or an elected alternate valuation date. Retain appraisal support even when not required to be attached.
Report U.S. stocks and bonds on Schedule B using the valuation methods required by the instructions. Stock in U.S. corporations is commonly includible, while valuation methods must be documented for closely held interests.
Step 7: Evaluate cash, notes, and life insurance carefully
Report items on Schedule C only when they qualify as U.S.-situated under nonresident alien estate tax rules. Certain U.S. bank deposits and similar items may be treated as property outside the United States and should not be assumed to be includible.
Life insurance proceeds must be analyzed based on the policy structure and the obligor's location. Documentation should support exclusion or inclusion to withstand review.
Step 8: Address jointly owned property and deductions
Report jointly owned property on Schedule E using the applicable joint interest rules. The includible portion depends on the title form and contribution history and must be supported by records.
When claiming deductions, confirm whether broader disclosure beyond U.S.-situated assets is required. Administration expenses and debt allocations must be substantiated under estate taxation rules.
Step 9: Analyze marital deduction and GST implications
Determine whether a marital deduction is available based on surviving spouse citizenship, treaty provisions, or use of a Qualified Domestic Trust. Schedule M must be completed accurately when a deduction is claimed.
Consider the generation-skipping transfer tax only when transfers are subject to the U.S. estate or gift tax and constitute a GST event. Schedule R should be completed only when applicable and supported by inclusion ratio analysis.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Execute, file, and retain records
Sign the return as executor or fiduciary and complete the preparer sections when applicable.
Assemble schedules and attachments in the order required by the 2016 instructions.
File Form 706-NA using the correct IRS address listed in the instructions and retain a complete copy of the filing package. Proper record retention supports future estate tax closing letters, transfer certificates, and audit defense.
Final Quality Check Before Submission
Confirm schedule totals reconcile to the reported gross estate, and ensure each U.S.-situs classification has documentation that supports inclusion or exclusion under the 2016 Line
Instructions. Treaty-based positions should be described consistently across the return and any attached statements, including estate tax treaties such as the Canada-U.S. Tax Treaty when relevant.
Verify deductions and the marital deduction are supported by required disclosures, and include
Schedule R only when a generation-skipping transfer is subject to U.S. transfer tax here.
Confirm all IRS forms and attachments are assembled in the correct order, and ensure the estate tax return is signed and dated by the executor or counsel.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
