What Form 706-NA (2010) Is For
Form 706-NA (2010), the United States Estate (and Generation-Skipping Transfer) Tax Return for Nonresident Not a Citizen, is used to report the estate tax owed on assets located in the United States that belonged to a decedent who was neither a U.S. citizen nor a U.S. resident at the time of death. It determines whether estate tax applies to the decedent’s U.S.-situated property and calculates any generation-skipping transfer (GST) tax liability.
Executors or estate representatives must file this estate tax return if the gross estate in the United States exceeds $60,000 at the decedent’s death. This threshold includes property such as real estate, tangible personal property, and stock in U.S. corporations. The form ensures that all assets within the U.S. are accurately valued and that estate taxes are correctly calculated and paid to the Department of the Treasury.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive IRS Form 706-NA (2010): Estate Tax Guide for Nonresidents.
When You’d Use Form 706-NA
Form 706-NA is used when a nonresident, not a citizen of the United States, dies owning U.S.-situated assets with a total value exceeding $60,000. Executors must file this estate tax return to report and pay any U.S. estate tax owed. It is also required for amended or late filings when additional assets, deductions, or corrections are identified after the original submission. Filing ensures compliance with federal estate tax laws and proper settlement of the decedent’s U.S. property.
Key Rules or Details for 2010
In 2010, the federal estate tax temporarily lapsed before being reinstated under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act. For that year, estates of nonresident aliens faced a 35% estate tax rate with a $60,000 filing threshold. The unified credit available was $13,000, and the generation-skipping transfer tax rate was zero. Executors could also elect the modified carryover basis rule under Section 1022 by filing Form 8939 instead of Form 706-NA, which excludes the estate from federal estate tax.
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: Determine Filing Requirement
Identify whether the total value of U.S.-situated assets exceeds $60,000. Include real estate, financial institution accounts located in the U.S., and stock in U.S. corporations.
Step 2: Gather Required Documentation
Executors must collect certified copies of the will, death certificate, appraisals of U.S. property, and documentation for trust assets or other assets. Foreign-language documents must include English translations.
Step 3: Confirm Executor Authority
Provide evidence of executor status, such as a court appointment or certified authorization. A signed statement alone is not sufficient.
Step 4: Complete Schedules A and B
List all U.S.-situated assets and calculate the taxable estate by subtracting allowable deductions. Deductions include administration expenses, debts, mortgages, and other qualifying payments.
Step 5: Compute Estate Tax
Use the unified rate schedule in the form instructions to compute the tentative tax. Apply the unified credit and any available treaty benefits to determine the final tax owed.
Step 6: File and Pay the Tax
Submit the completed form and payment to the Internal Revenue Service Center in Cincinnati, Ohio. Payment must be made in U.S. dollars to the United States Treasury. Executors must pay by the due date, even if they have an approved filing extension.
Common Mistakes and How to Avoid Them
Common filing errors on Form 706-NA can lead to delays, penalties, or disallowed deductions. Paying close attention to these details ensures accurate and compliant submissions.
- Filing the wrong form: Use Form 706-NA, not Form 706, for a nonresident alien decedent’s U.S. estate.
- Failing to report U.S. assets: Include all U.S.-situated assets, such as stock in American corporations and tangible property located in the United States.
- Omitting required schedules or valuations: Attach all necessary schedules and fair market valuations to support reported asset values.
- Using inconsistent valuation dates: Apply the same valuation date for all assets, as required under IRS estate tax rules.
- Overlooking treaty-based exemptions: Review applicable tax treaties for potential exemptions or deductions before filing.
- Missing the filing or payment deadline: File and pay estate tax on time to avoid accruing penalties and interest.
- Submitting incomplete or untranslated documents: Ensure all supporting materials are complete and, if applicable, translated into English for IRS review.
Following the IRS's instructions carefully and maintaining organized records helps prevent common errors and ensures the smooth processing of Form 706-NA.
What Happens After You File
After filing Form 706-NA, the IRS reviews the estate tax return for completeness and accuracy. The review process may take several months, depending on the size and complexity of the estate. If additional information is needed, the IRS will contact the executor for clarification or documentation. Once approved, the IRS may issue an estate tax closing letter confirming that no further tax is due, allowing the executor to finalize the estate’s distribution and property transfers.
FAQs
Who must file IRS Form 706-NA (2010)?
Executors must file IRS Form 706-NA (2010) when the decedent’s death involved a nonresident alien whose gross estate includes U.S.-situated assets exceeding $60,000 in value. The estate tax return ensures all taxable property, funds, and other assets are accurately reported.
Can a surviving spouse qualify for deductions under estate tax rules?
A surviving spouse may qualify for a marital deduction only if they are a U.S. citizen or if the property passes to a qualified domestic trust (QDOT). This deduction can reduce the estate’s taxable value and lower the total taxes imposed.
What is the due date for filing the estate tax return?
The estate tax return is generally due nine months after the decedent’s death. Executors may submit Form 4768 to request an automatic six-month extension. However, any tax owed must still be paid by the original due date to avoid penalties.
How are trust assets and other assets treated in the estate tax process?
Trust assets, financial institution accounts, and other assets located in the United States are included in the gross estate. These items are subject to valuation rules that determine the property’s fair market value at the time of the decedent’s death.
Are generation-skipping transfers taxed for 2010 estates?
For 2010 estates, the generation-skipping transfer tax was set at zero percent. Although not taxed for that period, executors must still identify and report qualifying transfers on the tax return to maintain compliance with IRS rules.
Can an executor or trustee claim deductions for estate debts or payments?
Yes, executors or trustees may claim deductions for estate debts, mortgages, and payments related to the estate’s administration. These deductions reduce the taxable value of the estate and the amount of estate tax imposed under current federal law.
What happens if the estate tax is overpaid?
If the estate pays more tax than required, the IRS may issue a refund after verifying the tax return. Refunds are paid by check or direct deposit to the estate’s account once the review process is complete, and no additional taxes are due.
