Form 706-NA Instructions for Nonresident Alien Estates

Form 706-NA is the U.S. estate tax return an executor files for someone who was not a U.S. citizen and not domiciled in the United States when they died, if that person owned U.S. property worth more than a small threshold. The instructions for Form 706-NA require filing within nine months of death when the decedent’s U.S.-situs assets plus adjusted taxable gifts made after December 31, 1976 exceed $60,000, and the return covers both estate tax and generation-skipping transfer tax on U.S.-connected property.¹² Unlike the Form 706 filed for U.S. citizens, this return taxes only property located in or connected to the United States rather than the decedent’s worldwide wealth.

Who Must File

A nonresident alien for estate tax purposes is someone who was neither a U.S. citizen nor domiciled in the United States at death. Domicile means the decedent lived here with no definite present intention of leaving. A person on a temporary assignment who planned to return home would not usually be domiciled; someone who settled permanently would be, even after a short time.

The executor must file if the date-of-death value of the decedent’s U.S.-situated assets, together with adjusted taxable gifts made after December 31, 1976, exceeds $60,000.¹ That threshold is fixed by statute and does not adjust for inflation, so a single U.S. brokerage account or a modest piece of real estate can trigger a filing requirement.

Filing Deadline and Extension

Form 706-NA is due nine months after the date of death, and the tax is due by that same date.³ If the ninth month has no matching calendar day, the deadline falls on the last day of that month.

Filing Form 4768 gives the executor an automatic six-month extension to file.⁴ The extension applies only to filing, not to payment. Interest runs on any unpaid balance from the original due date whether or not an extension was granted.³

Which Property Counts as U.S.-Situs

The situs rules decide what actually gets taxed. Getting this right is the most consequential part of preparing the return, because a misclassified asset can shift the tax bill in either direction. The rules come from IRC sections 2104 and 2105 and do not always match intuition.

Property Treated as Inside the United States

The following assets are U.S.-situs for estate tax purposes:⁵

Real property in any U.S. state or territory: land, houses, condominiums, commercial buildings.
Tangible personal property physically located in the United States at death, such as furniture, vehicles, artwork, and jewelry.
Stock in U.S. corporations, no matter where the certificates are held.
Debt obligations of U.S. persons — bonds, notes, and similar instruments issued by U.S. individuals, corporations, or government entities — unless the portfolio interest exception applies.
Property transferred by the decedent within three years of death, or through revocable trusts, when it was located in the U.S. either at the time of transfer or at death.

Property Treated as Outside the United States

Several categories are excluded even when physically located in the U.S.:⁶

Life insurance proceeds on the decedent’s life, whether the insurer is domestic or foreign.
Stock in foreign corporations, even when the shares sit in a U.S. brokerage account.
Deposits with U.S. banks, provided the decedent was not engaged in a U.S. trade or business. This exclusion covers bank deposits only; a cash balance sitting inside a brokerage account does not qualify.
Portfolio debt obligations that meet the exception under IRC section 871(h)(2).
Works of art on loan for public exhibition to a qualifying gallery or museum at the time of death.

The bank-versus-brokerage distinction trips up many estates. Cash in a checking account can be exempt while the same dollars, held as a cash balance in a brokerage account, are taxable. Verify where each account is held before valuing it.

Calculating the Gross and Taxable Estate

The return requires the executor to report the decedent’s worldwide gross estate, not just the U.S. portion. The worldwide figure matters because it drives the proportionate deduction calculation, even though only U.S.-situs property is taxed.

Allowable deductions — funeral costs, administration expenses, claims against the estate, and unpaid mortgages on U.S. property — are limited to a proportionate share. Divide the U.S. gross estate by the worldwide gross estate, then multiply that fraction by total worldwide deductions. If the worldwide estate was $2 million, U.S.-situs property was $500,000, and worldwide deductions were $100,000, the allowable deduction against the U.S. estate is $25,000.⁷

Valuation

Property is generally valued at fair market value on the date of death.⁸ For publicly traded stock, that is the average of the high and low selling prices on that date. When death falls on a weekend or holiday, average the mean prices from the nearest trading days on either side.

The executor may elect an alternate valuation date, which values estate property six months after death (or, for property sold or distributed sooner, the date it left the estate). The election is available only if it reduces both the gross estate and the net estate tax.⁸

Tax Rates and the Unified Credit

The tax on a nonresident alien’s U.S. property uses the same graduated rate table applied to U.S. citizens, starting at 18 percent and reaching 40 percent on amounts above $1 million.⁹ The credit that offsets the tax, however, is much smaller.

The default unified credit for a nonresident alien estate is $13,000, which shelters roughly $46,000 of taxable transfers.¹⁰ The credit available to U.S. citizens shelters millions of dollars. That gap is why even a modest U.S. holding can produce a real tax bill.

Larger Credit Under an Estate Tax Treaty

If the decedent was a citizen of a country with an estate tax treaty with the United States, the estate may claim a prorated unified credit that is often much larger than $13,000. Take the full credit a U.S. citizen would receive for the year of death and multiply it by the ratio of U.S.-situs assets to worldwide assets.¹⁰ When U.S. property is a small share of the worldwide estate, the prorated credit can wipe out the tax entirely.

Fifteen countries currently have estate or gift tax treaties with the U.S., each with its own terms.¹¹ Estates claiming any treaty-based benefit must attach a disclosure statement to Form 706-NA identifying the specific treaty article and explaining the claim.⁷

Marital Deduction for a Non-Citizen Surviving Spouse

The unlimited marital deduction that applies between U.S. citizen spouses is not automatic here. For a nonresident alien estate, the marital deduction is available only if the surviving spouse is a U.S. citizen or the property passes through a Qualified Domestic Trust (QDOT).⁸¹²¹³ Estates claiming the marital deduction or a charitable deduction must attach the relevant schedules from Form 706 to the 706-NA return.

Documents to Gather Before Filing

Two categories of records support the return.

Identity and authority: the decedent’s full name, date of death, foreign address, and country of citizenship; documentation of the executor’s authority to act, such as a certified copy of the will or a court order; and a certified copy of the death certificate.⁸⁷

Valuation evidence: appraisals for U.S. real estate, brokerage statements showing holdings and prices on the date of death, and financial records for any closely held business interests. Keep invoices and records for claimed deductions, including funeral expenses, legal fees, and outstanding debts. Because the proportionate deduction calculation depends on worldwide values, gather records for assets located anywhere in the world, not only U.S. property.

Where and How to Submit the Return

Sign and date the return and mail it with all supporting documentation to:

Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999¹⁴

Use certified mail or an IRS-approved private delivery service so the estate has proof of the filing date. Payment can be made by check or money order payable to “United States Treasury,” with the decedent’s name, identifying number, and “Form 706-NA” written on the payment. Payment through the Electronic Federal Tax Payment System is also accepted.⁷

The full tax is due by the original nine-month deadline even if the executor has an extension to file. When paying in full is not possible, file on time and pay as much as possible to hold down the failure-to-pay penalty and interest.

Penalties for Late Filing or Late Payment

Late filing and late payment generate separate penalties that stack, plus interest on the unpaid balance.

The failure-to-file penalty is 5 percent of the unpaid tax for each month or partial month the return is late, capped at 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $525 or 100 percent of the tax owed.¹⁵

The failure-to-pay penalty is 0.5 percent of the unpaid tax per month, also capped at 25 percent. When both penalties apply to the same month, the filing penalty is reduced by the payment penalty amount, so the combined rate stays at 5 percent per month.¹⁶

Interest compounds on unpaid tax and penalties. The IRS underpayment rate for the first quarter of 2026 is 7 percent, and it is adjusted quarterly.¹⁷

Getting U.S. Assets Released With a Transfer Certificate

Even after filing and paying, the executor may need an IRS transfer certificate before U.S. financial institutions and title companies will release the decedent’s assets. This step often surprises executors when heirs abroad are waiting for funds.¹⁸

A transfer certificate is not required when an executor or administrator has been formally appointed and is acting within the United States. Otherwise, the procedure depends on whether Form 706-NA was required:

If Form 706-NA was required, fax a copy of the filed return, including all schedules reporting assets, to the IRS at 855-201-8011 from within the U.S. or 304-707-9970 from outside the U.S.
If Form 706-NA was not required, do not file one. Fax the IRS a package that includes copies of the will and any codicils, the death certificate, any foreign inheritance tax returns, and a sworn affidavit listing all U.S. assets, their values, the decedent’s citizenship and residence, and whether any U.S. bank accounts were used in a trade or business. Documents in a foreign language need English translations.

The IRS issues the certificate once it is satisfied that any tax owed has been paid. Processing typically takes six to nine months from the date the IRS receives all required documentation.¹⁸ Plan around that window when setting beneficiary expectations.

1
Internal Revenue Service. Frequently Asked Questions on Estate Taxes for Nonresidents Not Citizens of the United States
2
Internal Revenue Service. About Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return
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Internal Revenue Service. Instructions for Form 4768
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Internal Revenue Service. About Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes
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Office of the Law Revision Counsel. 26 USC 2104 – Property Within the United States
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eCFR. 26 CFR 20.2105-1 – Estates of Nonresidents Not Citizens; Property Without the United States
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Internal Revenue Service. Instructions for Form 706-NA
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Internal Revenue Service. Instructions for Form 706-NA
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Office of the Law Revision Counsel. 26 USC 2101 – Tax Imposed
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Office of the Law Revision Counsel. 26 USC 2102 – Credits Against Tax
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Internal Revenue Service. Estate and Gift Tax Treaties (International)
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Office of the Law Revision Counsel. 26 USC 2056A – Qualified Domestic Trust
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eCFR. 26 CFR 20.2056A-2 – Requirements for Qualified Domestic Trust
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Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges
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Internal Revenue Service. Failure to Pay Penalty
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Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
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Internal Revenue Service. Transfer Certificate Filing Requirements for the Estates of Nonresidents Not Citizens of the United States