What Form 706-NA (2013) Is For
IRS Form 706-NA (2013) is the official federal tax return used to report and calculate the estate tax and generation-skipping transfer tax for individuals who were not U.S. citizens or residents at the time of death. It applies to the estates of nonresident aliens who owned property or other assets located in the United States.
The form ensures that the proper amount of estate tax is paid on U.S.-situated property, including real estate, stocks in U.S. corporations, and tangible property located within the country. It also reports any generation-skipping transfer tax that may apply to transfers made to grandchildren or other skip persons.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our IRS Form 706-NA (2013): Estate Tax Guide for Nonresidents.
When You’d Use Form 706-NA
Executors, administrators, or other representatives must file Form 706-NA when the total value of a nonresident alien’s U.S.-situated property exceeds $60,000 at the decedent’s death. The tax return applies to estates that include real estate, stocks in U.S. corporations, or other assets located within the United States.
The due date for filing is nine months after death, and an extension of six months may be requested using Form 4768. Executors must pay tax owed by the original deadline to avoid interest or additional tax, and amended returns are required if more property or income is later discovered.
Key Rules or Details for 2013
For 2013, the estate tax rate for nonresident aliens reached a maximum of 40 percent under the American Taxpayer Relief Act of 2012. The unified credit allowed a $13,000 exemption, covering up to $60,000 of U.S.-situated assets in the gross estate. Only property within the United States—such as real estate, stocks in U.S. corporations, and tangible assets—is subject to taxation, while most foreign property remains exempt. Executors may also claim deductions for debts, funeral expenses, and qualified charitable contributions, and eligible estates may be entitled to treaty-based credits to reduce federal estate taxes.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for Estate, Gift, and Trust Forms.
Step-by-Step (High Level)
Step 1: Gather Required Documents
Collect all necessary records, including the decedent’s death certificate, will or letters of administration, proof of executor appointment, property appraisals, stock certificates, and prior gift tax returns.
Step 2: Complete Decedent and Executor Information
Enter the decedent’s identifying details, including name, citizenship, date and place of death, and all executor contact information.
Step 3: List Assets in the Gross Estate
Provide a detailed listing of all U.S.-situated assets. Each entry should include identifying information, descriptions, and fair market value as of the date of death or alternate valuation date if elected.
Step 4: Calculate Deductions and Credits
Deductions may include funeral and administration expenses, debts, mortgages, charitable gifts, and qualified marital or trust deductions. Executors should also apply allowable credits for foreign death taxes or prior transfers.
Step 5: Compute Tax and Apply Payments
Use the estate tax rate schedule to determine the tentative tax on the taxable estate. Apply the unified credit and any other eligible credits. Calculate the remaining federal tax owed and submit payment with the return.
Step 6: Attach Supporting Documents and File
Attach certified copies of wills, death certificates, valuations, foreign tax filings, and any other required supporting documents. File the return with the IRS office designated for Form 706-NA submissions, located in Kansas City, Missouri, for the 2013 tax year.
Common Mistakes and How to Avoid Them
- Failing to file because the estate seems small: File Form 706-NA if U.S.-based assets exceed $60,000, even when the worldwide estate appears modest.
- Misclassifying property location: Always treat stock in a U.S. corporation as U.S.-situated property, regardless of the owner’s country of residence.
- Omitting required documentation: Include certified wills, property valuations, and supporting schedules to prevent IRS delays or rejection.
- Using improper valuation methods: Obtain qualified appraisals for real estate and securities to ensure accuracy and compliance with IRS rules.
- Overlooking treaty benefits or credits: Review applicable estate tax treaties and provide documentation to claim foreign tax credits or exemptions that can lower the total tax due.
Thorough documentation, accurate valuation, and adherence to U.S. asset rules enable executors to file Form 706-NA correctly, thereby avoiding unnecessary delays or penalties.
What Happens After You File
After the executor files the estate tax return, the IRS reviews all reported assets, deductions, and supporting documents for accuracy. The review process can take several months, depending on the size and complexity of the estate. Once verified, the IRS issues an estate tax closing letter confirming that all taxes have been satisfied. If discrepancies or additional tax are found, the executor will receive a notice requesting payment or clarification before final approval.
FAQs
Who must file IRS Form 706-NA (2013)?
Any executor must file IRS Form 706-NA (2013) if the decedent’s U.S.-situated property exceeded $60,000 at death. This estate tax return ensures proper taxation of U.S. assets owned by a nonresident alien or foreign citizen.
Does the estate tax apply to worldwide property?
No, the estate tax applies only to U.S.-situated assets. Property such as U.S. real estate, securities, or other assets held in the country is included in the gross estate, while foreign assets are generally excluded.
What is the filing due date for Form 706-NA?
The tax return must be filed within nine months after the decedent’s death. Executors may request an extension using Form 4768; however, payments for any federal tax owed must still be made by the original due date.
Can a surviving spouse claim deductions on the estate tax return?
A surviving spouse can qualify for marital deductions only if they are a U.S. citizen or if trust assets pass through a Qualified Domestic Trust (QDOT). Otherwise, deductions are limited under federal estate and gift tax law.
How does the generation-skipping transfer tax apply?
The generation-skipping transfer tax applies when property is transferred to a skip person, such as a grandchild or a great-grandchild. Direct skips, taxable distributions, and taxable terminations are subject to federal taxes; however, certain exemptions and elections may be applicable.
Are gift or estate taxes paid separately?
Gift tax and estate tax are related but distinct. The IRS requires separate filings for lifetime gifts and for transfers occurring at death. Any additional tax due must be paid by the executor using federal funds from the estate.
What supporting documents are needed when filing?
Executors must attach supporting documents such as certified copies of the will, death certificate, and property appraisals. These help verify asset value, deductions, and other estate details to ensure the federal tax return is complete and accurate.
