Form 706-NA (2021): Nonresident Estate Tax Checklist
Purpose and Scope
Form 706-NA is used to compute U.S. estate tax, and, when applicable, generation-skipping transfer tax applies to nonresident alien decedents who were neither domiciled in the United
States nor U.S. citizens. This estate tax return applies when U.S. situs property creates potential federal estate taxes or related transfer taxes.
This checklist is tailored to 2020 filing requirements and focuses on the filing threshold analysis, the gross estate determination, and the accurate reporting of U.S. and non-U.S. assets. It supplements Internal Revenue Service instructions but does not replace professional advice.
Key Definitions and Filing Context
A nonresident alien decedent is treated as a non-resident of the U.S. for estate tax purposes when domicile and U.S. citizenship are absent, regardless of green card status or immigration classifications. This determination relies on facts evaluated under U.S. estate and gift tax laws.
The gross estate includes worldwide property interests valued under fair market value principles, even though only U.S. situs property is itemized in Part V. Non-U.S. assets affect unified credit exemption calculations and treaty relief analysis.
Filing Trigger and Threshold Rules
Form 706-NA filing requirements apply when U.S. situs assets combined with adjusted taxable gifts exceed the $60,000 filing threshold. This threshold applies only to nonresident alien decedents and is not superseded by the federal estate tax exemption.
Gift tax history, including transfers reported on Form 709, must be evaluated when applying the threshold test. Filing obligations exist even when tax liability is reduced or eliminated through credits or treaty relief.
Ten-Step Preparation Checklist
Step 1: Confirm NRNC status and death date
Confirm the decedent was not domiciled in the United States and did not hold U.S. citizenship at death. Verify the date of death, since valuation rules, filing deadlines, and tax liability depend on that date.
Step 2: Identify U.S. situs assets and apply the filing threshold
Inventory potential U.S. assets, including real estate, tangible personal property, and U.S.
corporate stock. Apply the $60,000 filing threshold using U.S. values and adjusted taxable gifts.
Step 3: Determine the entire Gross Estate worldwide
Determine which assets are included in the worldwide gross estate under Internal Revenue
Code inclusion rules. Separate U.S. assets reported in Part V from non-U.S. assets aggregated for Part IV.
Step 4: Value U.S. situs assets for Part V
Report only U.S. situs property in Part V and apply fair market value as of the date of death.
Use consistent valuation methods aligned with IRS forms and Form 706 guidance.
Step 5: Report non-U.S. assets on Part IV, line 2
Enter the total value of non-U.S. assets on Part IV, line 2, supported by required documentation.
Foreign estate filings or inventories may be necessary to substantiate reported totals.
Step 6: Prepare required attachments
Assemble attachments, including the death certificate, will, valuation support, and financial statements for closely held entities. Include copies of prior IRS forms, such as Form 709, when applicable.
Step 7: Attach English translations when required
Attach English translations for any non-English documents included with the tax return.
Translations must clearly correspond to original records and support valuation or ownership claims.
Step 8: Complete Form 706-NA parts in proper order
Complete Parts I, III, V, IV, and II in sequence to align with form logic. Avoid using Schedule L terminology, since Form 706-NA computes tax within its main parts.
Step 9: Address deductions and marital transfers
Claim administration expenses and other allowable deductions only when supported and appropriately allocated. Apply marital deduction rules carefully, including qualified domestic trust requirements when applicable.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Sign, file, and meet deadlines
Ensure the executor signs the return and includes proper taxpayer identification entries. File within nine months of death unless an application for extension of time, such as Form 4768, was approved.
Accuracy and Consistency Notes
Estate tax rules interact with broader U.S. estate and gift tax laws, including treaty relief and unified credit exemption frameworks. Recent developments may affect the mechanics of filing, but income tax programs generally do not apply.
Avoid incorrect schedule references and confirm the IRS transfer certificate and closing letter expectations separately. The timing of the estate tax closing letter depends on IRS processing cycles and the issuance of TC 421.
Final Pre-Filing Review
Confirm the filing threshold analysis is documented and supported. Verify that U.S. assets appear only in Part V, while non-U.S. assets are aggregated and reported in Part IV.
Confirm all attachments, signatures, and identification fields are complete. Timely filing supports accurate processing and reduces delays in receiving an estate tax closing letter or a tax closing letter.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
