Estate Tax

[NotEasy]

A foreign national has most of his assets in the US. His son is a US citizen. If the foreign national passes away, the son will be the beneficiary of the estate. Two questions:

(1) If the foreign national passes away, is his estate subject to estate tax in the US?

(2) If his estate is subject to US estate tax, does he (as a foreign national) qualify for the estate tax exclusion? (Is the exclusion 2m now?)

[Roland Slugg]

U.S. estate tax on non-resident alien

(1) If the foreign national passes away, is his estate subject to estate tax in the US?

Yes, but only his assets located (or deemed to be located) in the United States are taxed. With that exception, the make-up of the gross estate is the same as that for a U.S. citizen or resident. (Code §2013)

(2) If his estate is subject to US estate tax, does he (as a foreign national) qualify for the estate tax exclusion? (Is the exclusion 2m now?)

His estate qualifies for a special estate tax credit of $13,000. This is the equivalent of an exemption of $60,000 ... not the $2,000,000 U.S. citizens or residents are allowed. (Code §2102(c)(1)) The $13,000 is reduced by any gift tax unified credit allowed. (Code §2102(c)(3)(B))

There are a few other special rules regarding expatriation and tax treaties. Use Form 706NA, not Form 706.