What Form 706-NA Is For

Form 706-NA is the federal estate tax return used to calculate and report estate and generation-skipping transfer (GST) tax liability for decedents who were neither U.S. citizens nor U.S. residents at the time of their death. The estate tax is imposed on the transfer of the decedent's taxable estate located in the United States—not on what beneficiaries receive individually. IRS.gov

Unlike U.S. citizens and residents who use the standard Form 706, nonresident aliens face significantly different rules. While U.S. residents benefit from a multi-million-dollar exemption, nonresident aliens only get a $60,000 exemption for their U.S.-situated assets. This means estates that might not face taxation for U.S. citizens can trigger substantial tax liability for nonresident aliens. IRS.gov

The form captures all property located within U.S. borders, including real estate, tangible personal property physically located in the U.S., stock in U.S. corporations, and certain other investments. Insurance proceeds on the decedent's life are generally treated as property located outside the United States, even if the insurance company is American. Understanding what counts as "U.S.-situated" is critical to determining whether the form needs to be filed at all.

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

Original Filing Deadline

Form 706-NA must generally be filed within 9 months after the date of death. However, for decedents who died between January 1, 2010, and December 16, 2010, Congress granted special relief: the filing deadline was extended to September 19, 2011. This extraordinary extension reflected the unusual circumstances surrounding estate tax law changes that year. IRS.gov

Extensions

If you cannot meet the deadline, you can request an automatic 6-month extension by filing Form 4768 (Application for Extension of Time To File a Return and/or Pay U.S. Estate Taxes). Check the "Form 706-NA" box in Part II of Form 4768. This extension applies only to filing the return, not to paying any tax owed—interest will accrue on unpaid tax from the original due date. IRS.gov

Late Filing

If you miss the deadline without securing an extension, penalties will apply unless you can demonstrate reasonable cause. The law imposes penalties for both late filing and late payment of tax. If you file late and later receive a penalty notice, you can send an explanation to the IRS demonstrating reasonable cause. Do not attach explanations when initially filing—the IRS will only consider explanations submitted in response to penalty notices.

Amended Returns

If you discover errors or omissions after filing, you may need to file an amended Form 706-NA. Amended returns follow similar procedures to original returns but should clearly indicate they are amendments. Common reasons for amendments include discovering additional assets, correcting valuation errors, or claiming previously overlooked deductions.

Key Rules or Details for 2010

Extraordinary 2010 Context

The year 2010 was extraordinary for estate tax law. At the beginning of the year, the federal estate tax had actually lapsed—there was no estate tax at all. In December 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which retroactively reinstated the estate tax with special provisions for 2010 decedents. IRS.gov

Filing Threshold

The executor must file Form 706-NA if the U.S.-situated gross estate exceeds $60,000. This amount can be reduced by the sum of the gift tax specific exemption allowed for gifts made between September 9, 1976, and December 31, 1976, plus adjusted taxable gifts made after December 31, 1976. IRS.gov

Tax Rate

The maximum estate tax rate for 2010 was 35%, a historically low rate compared to previous years when the rate reached as high as 55%. IRS.gov

Unified Credit

The unified credit available to nonresident alien estates in 2010 was generally $13,000. For citizens of U.S. possessions, the credit could be higher—the greater of $13,000 or a proportional amount based on the ratio of U.S.-situated assets to worldwide assets. Tax treaties with certain countries (including Australia, Canada, Finland, France, Germany, Greece, Italy, Japan, Norway, and Switzerland) may provide enhanced credits. IRS.gov

Generation-Skipping Transfer Tax

The GST tax rate was zero for all transfers occurring in 2010, reverting to 35% for 2011 and beyond. IRS.gov

Special 2010 Election

Executors of 2010 decedents had a unique option: they could elect to apply modified carryover basis treatment under Section 1022 instead of the estate tax regime. If this election was made, the estate would not be subject to federal estate tax, and Form 706-NA would not be filed. Instead, the executor would file Form 8939. This was a once-in-a-lifetime legislative option that disappeared after 2010. IRS.gov

Step-by-Step (High Level)

Step 1: Determine Filing Requirement

Calculate the total value of all U.S.-situated assets as of the date of death. If the total exceeds $60,000 (adjusted for prior gift exemptions and adjusted taxable gifts), you must file Form 706-NA. Assets located outside the United States are not counted toward this threshold but must still be reported for calculation purposes.

Step 2: Gather Required Documents

Collect all necessary documentation: a certified copy of the will (if the decedent died testate), a copy of the death certificate, balance sheets for any closely held corporate stock, appraisals for real estate and valuable personal property, and copies of all U.S. gift tax returns the decedent filed. Attach English translations for all documents in other languages. IRS.gov

Step 3: Establish Executor Authority

The executor must provide documentation proving their status, such as a certified copy of the will or court order designating them as executor. A simple statement by the executor attesting to their status is insufficient. IRS.gov

Step 4: Complete Schedule A

List all U.S.-situated assets on Schedule A with detailed descriptions. Include stocks (with CUSIP numbers), bonds, real estate, tangible personal property, and interests in partnerships or trusts. Provide fair market values as of the date of death or, if elected, the alternate valuation date (6 months after death). The alternate valuation date can only be elected if it decreases both the gross estate value and the net estate tax due. IRS.gov

Step 5: Complete Schedule B

Calculate the taxable estate by starting with the total U.S.-situated assets from Schedule A, then subtracting allowable deductions. Allowable deductions include funeral expenses, administration expenses, claims against the estate, unpaid mortgages and liens, casualty losses, state death taxes, charitable deductions (for transfers to U.S. entities), and marital deductions (if the surviving spouse is a U.S. citizen or the property passes to a qualified domestic trust). You must also report the value of assets located outside the United States. IRS.gov

Step 6: Calculate Tax

Use Part II of Form 706-NA and Table A (Unified Rate Schedule) from the Form 706 instructions to compute the tentative tax. Apply the unified credit and any other applicable credits (such as foreign death tax credits or treaty-based credits). Subtract credits from the gross tax to determine the net estate tax due. IRS.gov

Step 7: Sign and File

The executor must sign the return under penalties of perjury. If there are multiple executors, all are responsible for the return, but it is sufficient for only one to sign. Mail the completed Form 706-NA with all attachments to: Department of the Treasury, Internal Revenue Service Center, Cincinnati, OH 45999. IRS.gov

Step 8: Pay Tax Due

Pay any balance due within 9 months after the decedent's death (or by the extended deadline if an extension was granted). Make checks payable to "United States Treasury" in U.S. dollars. Interest accrues on late payments from the original due date.

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Residency Status

One of the most fundamental errors is filing the wrong form. Form 706-NA is only for nonresident aliens—individuals who were neither domiciled in nor citizens of the United States at death. Long-term green card holders who maintained U.S. residency should use Form 706, not Form 706-NA. Review the definitions carefully before proceeding. IRS.gov

Mistake #2: Misidentifying U.S.-Situated Assets

Not all assets owned by nonresident aliens are subject to U.S. estate tax. Life insurance proceeds, bank deposits not effectively connected with a U.S. trade or business, certain debt obligations issued after July 18, 1984, and portfolio debt are generally treated as property located outside the United States. Conversely, stock in U.S. corporations is always U.S.-situated regardless of where certificates are located. Carefully apply the location rules from the instructions. IRS.gov

Mistake #3: Failing to Attach Required Schedules

If you claim certain deductions (marital, charitable, qualified conservation easement) or answer "Yes" to specific questions in Part III (regarding joint tenancies, powers of appointment, etc.), you must attach corresponding schedules from Form 706. Many executors forget this requirement, leading to processing delays or disallowed deductions. IRS.gov

Mistake #4: Inadequate Documentation

The IRS requires robust supporting documentation: certified copies of wills, death certificates, balance sheets for closely held stock, appraisals, and English translations of foreign documents. Insufficient documentation is one of the leading causes of examination and delays. Gather everything before filing. IRS.gov

Mistake #5: Incorrect Valuation Date

If you elect the alternate valuation date, all property must be valued either 6 months after death or on the date of earlier disposition. You cannot cherry-pick dates for different assets. Furthermore, the alternate valuation can only be elected if it reduces both the gross estate and the net tax due. Making this election without satisfying both conditions will result in rejection. IRS.gov

Mistake #6: Overlooking Treaty Benefits

The United States has estate tax treaties with numerous countries. These treaties may provide enhanced unified credits, modified marital deductions, or special exemptions (like Canada's small estate relief for estates under $1.2 million). Failing to claim treaty benefits can result in significant overpayment. If claiming treaty benefits, attach a statement indicating the treaty-based return position. IRS.gov

Mistake #7: Missing the State Death Tax Deduction Deadline

State death tax deductions must generally be claimed within 4 years of filing the return. Many executors forget to claim this deduction or fail to obtain the required certificate from state taxing authorities showing the amount paid. IRS.gov

What Happens After You File

Initial Processing

Once the IRS receives your Form 706-NA, it undergoes initial processing at the Cincinnati Service Center. The return is checked for completeness, mathematical accuracy, and proper supporting documentation. If the return is incomplete or contains errors, the IRS may send it back or request additional information. Processing times vary based on complexity but typically range from several months to over a year. IRS.gov

Examination Possibility

Not all estate tax returns are examined, but returns reporting large estates, complex assets, or unusual deductions face higher examination rates. If your return is selected for examination, an IRS estate tax examiner will contact you to schedule an audit. Examinations can focus on valuation issues, the propriety of deductions, residency determinations, or other aspects of the return. IRS.gov

Estate Tax Closing Letter

After the IRS completes its review of the return (and any examination), it may issue an estate tax closing letter. This letter provides official acceptance of the return and states that no additional estate tax is due. The closing letter is important for finalizing the estate administration and transferring assets to beneficiaries. However, not all estates automatically receive closing letters—they are generally issued only when there is tax due or upon specific request. You can request a closing letter by writing to the IRS at the Cincinnati Service Center address, but the IRS recommends waiting at least 4 months after filing (or 30 days after completion of any examination) before requesting. IRS.gov

Statute of Limitations

Generally, the IRS has three years from the date the return was filed (or the due date, whichever is later) to assess additional tax. However, this period can be extended if substantial undervaluation, fraud, or failure to file is involved. IRS.gov

Transfer Certificates

If the estate includes U.S. real estate or other valuable U.S.-situated property, beneficiaries or purchasers may request a transfer certificate (sometimes called an estate tax clearance certificate) to ensure the property is free from federal estate tax liens. These certificates are obtained by filing Form 706-NA along with a specific request. IRS.gov

FAQs

Q1: Do I need to file Form 706-NA if the estate is below $60,000?

No. If the value of U.S.-situated assets (after adjusting for prior gift exemptions and adjusted taxable gifts) does not exceed $60,000, you are not required to file Form 706-NA. However, you may choose to file voluntarily to obtain an estate tax closing letter or transfer certificate for real property. IRS.gov

Q2: What if the decedent was a former U.S. citizen who expatriated?

U.S. expatriates—individuals who lost U.S. citizenship within 10 years of death with a principal purpose of avoiding U.S. taxes—face special rules. They may be treated as owning a proportional share of U.S. property held by foreign corporations they controlled. The rules vary depending on when expatriation occurred. Consult the definitions section of the instructions carefully and consider seeking professional advice. IRS.gov

Q3: Can I deduct funeral and administration expenses incurred outside the U.S.?

Yes. You may deduct funeral expenses, administration expenses, claims against the estate, unpaid mortgages, liens, and casualty losses whether or not they were incurred or paid in the United States. However, the total deductions on Schedule B are generally limited proportionally based on the ratio of U.S.-situated assets to worldwide assets. IRS.gov

Q4: How does the alternate valuation date work?

You may elect to value all property as of 6 months after death (or the date of earlier disposition for property sold within 6 months). This election can only be made if it reduces both the gross estate value and the net estate tax due. Once made, the election applies to all property—you cannot use different dates for different assets. Check the "Yes" box at the beginning of Schedule A to make this election. IRS.gov

Q5: Are there marital deduction benefits for nonresident alien estates?

Generally, the marital deduction is only available if the surviving spouse is a U.S. citizen or if the property passes to a qualified domestic trust (QDOT). However, certain estate tax treaties (such as the U.S.-Canada treaty) provide alternative marital credits. If claiming a treaty-based marital benefit, attach Schedule M from Form 706 and a computation showing how you calculated the benefit. IRS.gov

Q6: What is the 2010 carryover basis election, and should I consider it?

For decedents dying in 2010 only, executors could elect to apply modified carryover basis treatment instead of the estate tax regime. If this election was made, no estate tax applied, but beneficiaries received a carryover income tax basis in inherited property (rather than a stepped-up basis). The election was made by filing Form 8939 instead of Form 706-NA. This was a complex decision with significant income tax implications that required careful analysis by a tax professional. IRS.gov

Q7: Can I get help from the IRS if I have questions while preparing the return?

Yes. You can contact the IRS at the Cincinnati Service Center for questions about Form 706-NA. For transfer certificate inquiries, write to: Internal Revenue Service, Cincinnati, OH 45999, Stop 824G. Additionally, hiring an experienced estate tax attorney or CPA is highly recommended for nonresident alien estates, as the rules are complex and the consequences of errors can be significant. IRS.gov

Important Disclaimer

Disclaimer: This summary is for informational purposes only and does not constitute legal or tax advice. Estate tax law is complex, particularly for nonresident aliens, and is subject to change. Always consult with qualified tax and legal professionals when dealing with Form 706-NA and estate tax matters.