What Form 706-NA Is For

Form 706-NA is the federal tax return used to report estate taxes and generation-skipping transfer (GST) taxes for people who die while being neither U.S. citizens nor U.S. residents. Think of it as the estate tax return specifically designed for foreigners who own U.S. property when they pass away.

The form calculates taxes owed on the deceased person's U.S.-situated assets—property physically located in the United States or legally tied to it. Unlike U.S. citizens and residents who must report their worldwide assets on Form 706, nonresident noncitizens only report what they own within U.S. borders.

Who qualifies as a "nonresident not a citizen"? For estate tax purposes, this means someone who was not domiciled (permanently living) in the United States and was not a U.S. citizen at death. Importantly, someone might be a U.S. resident for income tax purposes but still be considered a nonresident for estate tax purposes—domicile is determined by where someone intended to make their permanent home, not just where they lived temporarily.

The form serves two main purposes: calculating the estate tax on U.S. assets and computing the generation-skipping transfer tax when assets skip a generation (like going directly from grandparent to grandchild).

IRS.gov - About Form 706-NA

When You’d Use Form 706-NA (Late/Amended Returns)

Standard Filing Deadline: The executor (person handling the estate) must file Form 706-NA within 9 months of the date of death. For example, if someone died on March 15, 2018, the return would be due by December 15, 2018.

Extensions Available: If you need more time, you can request an automatic 6-month extension by filing Form 4768 before the original deadline. This extends the filing deadline to 15 months after death. Executors outside the country may request an additional extension by filing a second Form 4768 with a written explanation.

Important caveat: Extensions give you more time to file the paperwork, but they don't extend the time to pay taxes. Taxes are still due 9 months after death unless you specifically request an extension for payment (also using Form 4768).

Amended Returns: If you discover errors after filing, you must submit a supplemental Form 706-NA. Write "Supplemental Information" across the top of page 1, attach a statement explaining what changed with supporting documentation, and include a copy of the original return. File the amended return at the same IRS address where you filed the original.

Instructions for Form 706-NA

Key Rules or Details for 2018

Filing Threshold: You must file Form 706-NA if the combined value of:

• U.S.-situated assets at date of death
• Gift tax specific exemption (for gifts made September 9–December 31, 1976)
• Adjusted taxable gifts made after December 31, 1976

Exceeds $60,000—dramatically lower than the $11.18 million threshold for U.S. citizens in 2018.

Unified Credit: Nonresident noncitizens receive a unified credit of $13,000 (compared to $4,417,800 for U.S. citizens in 2018). This credit reduces the estate tax owed dollar-for-dollar. Some tax treaties with countries like Australia, Canada, Finland, France, Germany, Greece, Italy, Japan, and Switzerland may increase this credit—you must claim treaty benefits by attaching a statement to the return.

U.S.-Situated Assets Include

• Real estate physically located in the U.S.
• Stock in U.S. corporations (regardless of where certificates are kept)
• Tangible personal property in the U.S. (cars, boats, jewelry, artwork)
• Debt obligations of U.S. persons or entities

Assets NOT Included

• Bank deposits with U.S. banks (unless connected to a U.S. business)
• Life insurance proceeds (located outside the U.S.)
• Stock in foreign corporations
• Certain U.S. debt obligations eligible for tax exemption under IRC §871(h)(1)

Tax Rates: Estate tax rates range from 18% to 40% under the Unified Rate Schedule (Table A in Form 706 instructions).

Instructions for Form 706 (Rev. November 2018)

Step-by-Step (High Level)

Step 1: Gather Documentation

• Death certificate (required attachment)
• Certified copy of will, if one exists
• Appraisals of U.S. property
• Stock certificates or brokerage statements
• Deeds to U.S. real estate
• All prior U.S. gift tax returns (Form 709)
• Balance sheets for closely-held corporate stock

Step 2: Determine Executor Status

Executors must provide documentation proving their authority (court orders, certified will copies). Multiple executors may file jointly, though only one signature is required.

Step 3: Value All Assets

Use fair market value as of the date of death, or elect alternate valuation (6 months after death) if it reduces both estate value and tax owed.

Step 4: Complete the Form in Order

• Part I: Decedent and executor information
• Part III: General information (citizenship history, powers of appointment)
• Part V: List all U.S.-situated assets
• Part IV: Calculate taxable estate (gross estate minus deductions)
• Part II: Compute tax using the Unified Rate Schedule

Step 5: Calculate Deductions

Allowable deductions include funeral expenses, administration costs, debts, mortgages, and state death taxes paid. Charitable deductions require the charity to be domestic or for U.S. use. Marital deductions are limited unless the spouse is a U.S. citizen or property passes to a qualified domestic trust.

Step 6: File and Pay

Mail to: Internal Revenue Service Center, Kansas City, MO 64999. Pay electronically through EFTPS (IRS.gov/Payments) when possible.

Common Mistakes and How to Avoid Them

Mistake #1: Missing the Filing Threshold

Many executors don't realize the $60,000 threshold is extremely low. Even a modest U.S. vacation home could trigger the requirement. Solution: Inventory all U.S. assets early.

Mistake #2: Incomplete Documentation

Forgetting to attach the death certificate, certified will, or English translations of foreign documents delays processing. Solution: Use a checklist and attach all required documents before mailing.

Mistake #3: Using Wrong Form 706 Schedules

Form 706-NA references schedules from Form 706, but you must use the version corresponding to the decedent's date of death (2018 in this case). Solution: Download the correct year's forms from IRS.gov.

Mistake #4: Undervaluing Assets

Significant undervaluation (reporting property at 65% or less of actual value) triggers a 20% penalty. Gross understatement (40% or less) increases the penalty to 40%. Solution: Hire qualified appraisers for real estate, closely-held businesses, and unique assets.

Mistake #5: Missing Treaty Benefits

Failing to claim applicable tax treaty benefits costs money. Solution: If the decedent was from a treaty country, research treaty provisions and attach a treaty-based return position statement citing Regulations §301.6114-1.

Mistake #6: Late Filing Without Extension

Late filing penalties start immediately unless you have reasonable cause. Solution: File Form 4768 for an extension before the 9-month deadline.

Mistake #7: Not Filing Form 8971

Estates must file Form 8971 (beneficiary basis reporting) within 30 days of filing Form 706-NA. Solution: Complete Form 8971 and Schedules A simultaneously with the estate return.

What Happens After You File

Immediate Processing: The IRS processes your return at the Kansas City Service Center. Initial processing takes several months.

Estate Tax Closing Letter: Unlike automatic issuance in the past, closing letters are now issued only upon request. Wait at least 9 months after filing, then request through Pay.gov and pay the $56 fee (as of May 2025). The closing letter confirms IRS acceptance and provides proof for transferring assets.

Alternative to Closing Letter: Request an account transcript using Form 4506-T, which shows transaction history including acceptance of Form 706-NA. Tax professionals can access transcripts online through the Transcript Delivery System.

Examination Possibility: Some returns are selected for audit. The IRS examines valuation discrepancies, deduction claims, and treaty benefit positions. Examinations can take 1-3 years.

Payment Plans: If you elected to pay estate tax in installments (section 6166 for closely-held businesses) or postponed tax on reversionary interests (section 6163), the IRS monitors payment schedules.

Penalty Notices: If penalties apply for late filing, late payment, or valuation understatement, you'll receive a notice explaining the penalty. You can respond with a reasonable cause explanation at that time (don't attach explanations to the original return—they won't be considered).

Frequently Asked Questions on Estate Taxes

FAQs

Q1: What if the estate is worth less than $60,000?

No filing is required if total U.S.-situated assets (plus gift tax exemption and adjusted taxable gifts) fall below $60,000. However, beneficiaries may still need transfer certificates to move U.S. assets, which requires contacting the IRS even without filing Form 706-NA.

Q2: Can I deduct foreign estate taxes paid?

No. Only U.S. state and District of Columbia death taxes are deductible. However, some tax treaties provide credits for foreign taxes to avoid double taxation.

Q3: What if I discover additional U.S. assets after filing?

File a supplemental Form 706-NA immediately. Check the box on line 12, attach a statement detailing the newly discovered assets with supporting documentation, and include a copy of your original return.

Q4: Do joint bank accounts with a U.S. person count as U.S. assets?

Generally, bank deposits in U.S. banks by nonresident noncitizens are NOT subject to estate tax unless connected to a U.S. business. However, other jointly-owned property (like real estate or brokerage accounts holding U.S. stocks) is included based on ownership rules.

Q5: What's the difference between Form 706 and Form 706-NA?

Form 706 is for U.S. citizens and residents, covering worldwide assets with an $11.18 million exemption in 2018. Form 706-NA is for nonresident noncitizens, covering only U.S.-situated assets with just a $60,000 exemption and $13,000 credit.

Q6: Can I get a refund if I overpay?

Yes. If your payments exceed the tax due, you can request a refund on Part II, line 18. Provide direct deposit information (lines 18b-18d) for faster refunds, or a check will be mailed. Refunds under $1 require written request.

Q7: What happens if the executor doesn't file?

If no executor files, every person holding the decedent's property becomes responsible for filing. Failure to file triggers penalties: 5% of unpaid tax per month (up to 25%) plus interest. Willful attempts to evade tax carry criminal penalties.