How to Fill Out and File Form 706-NA: Schedules, Elections, and Payment

To file Form 706-NA, the executor of a nonresident noncitizen decedent’s estate must submit the two-page United States Estate (and Generation-Skipping Transfer) Tax Return, along with supporting schedules and documents, to the IRS in Kansas City within nine months of the date of death whenever the decedent’s U.S.-situated property exceeded $30,000.¹ The return calculates estate tax and any generation-skipping transfer tax on the property the decedent owned in the United States, even though they were neither a citizen nor a resident at death.

When You Must File and By When

An estate must file Form 706-NA when the value of the decedent’s property situated in the United States exceeds $30,000 at the date of death.² That threshold is lower than most executors expect, and it triggers the filing obligation whether or not tax ends up being owed. The $13,000 unified credit available to nonresident noncitizen estates effectively shelters the first $60,000 of taxable estate value from tax,³ so an estate can cross the filing line without crossing the tax line.

The return is due nine months after the date of death.⁴ If you need more time to gather appraisals or coordinate with heirs abroad, file Form 4768 before the original deadline for an automatic six-month extension.⁵ Missing the deadline without an extension costs 5 percent of the unpaid tax per month (or partial month), capped at 25 percent.⁶

One important boundary: if the U.S. estate is under $30,000, do not file the form. Filing anyway will slow down the transfer certificate process discussed at the end of this article rather than move it along.

What Counts as U.S.-Situated Property

The tax applies only to assets the law treats as located in the United States, regardless of where the decedent lived. The situs rules pull in more than most people realize, and getting this classification right determines the gross estate figure that drives the entire return.⁷

Real estate physically located in the United States.
Tangible personal property such as art, jewelry, cars, and furniture physically present in the country, with a narrow exception for certain artwork on loan for public exhibition.
Stock issued by any U.S. corporation, no matter where the certificates are held or where the decedent lived.
Bonds, promissory notes, and other debt obligations issued by U.S. persons, the federal government, or state and local governments.

Several assets that look American-connected are excluded. Life insurance proceeds on the decedent’s life are not U.S.-situated property, even when the insurer is a domestic company. Bank deposits at U.S. financial institutions are excluded so long as they are not tied to a U.S. trade or business the decedent operated. Portfolio debt obligations that qualify for the portfolio interest exemption also sit outside the taxable estate.⁸

Documents to Gather Before You Start

Assembling paperwork before touching the form saves significant time. You will need:

A copy of the death certificate, which must be attached to the return.⁹
English translations of every foreign-language document you plan to submit.
Professional appraisals of real estate and unique tangible assets showing fair market value on the date of death.
Brokerage and financial statements showing the date-of-death value of U.S. stock and other financial holdings.
A copy of any applicable estate tax treaty between the United States and the decedent’s country of citizenship.
The decedent’s SSN or ITIN, which the return requires and which the IRS wants written on any check submitted with the form.

Filling Out the Form

Form 706-NA itself is two pages, but it pulls in schedules from the full Form 706 when certain deductions or situations apply. Download the current form and instructions from the IRS website.¹

Part I: Decedent and Executor Information

Part I collects the decedent’s name, date of death, country of citizenship, and country of residence, along with the executor’s name, address, and contact information. The section is straightforward, but accuracy matters. The IRS uses it to match the return to any prior gift tax filings and to correspond with the executor.

Part II: Tax Computation

Part II walks through the statutory computation.¹⁰ Report the total fair market value of all U.S.-situated property, itemized on the form’s property listing. Subtract allowable deductions: debts, administration expenses, charitable bequests, and any marital deduction available through a qualified domestic trust. The result is the taxable estate. The tentative tax uses the same graduated rate schedule that applies to citizens and residents, reaching 40 percent on amounts over $1 million. From that, subtract the $13,000 unified credit and any credit for treaty relief, gift taxes, or tax on prior transfers.³

If the decedent used any of the unified credit for lifetime gifts to U.S. persons, the $13,000 estate tax credit is reduced by the amount previously claimed. Executors sometimes assume the full $60,000 exemption equivalent is available without checking the decedent’s gift history.

Schedules From Form 706 You May Need to Attach

Form 706-NA has no full set of schedules of its own. Instead, you borrow schedules from the standard Form 706 when specific situations apply. Attach Schedule M for a marital deduction, Schedule O for a charitable deduction, Schedule E for jointly held property, Schedule G for certain lifetime transfers, and Schedule H for powers of appointment.⁹ If the estate owes generation-skipping transfer tax, add Schedule R and Schedule R-1.

Two Elections That Can Change the Tax

The Treaty Credit

The default $13,000 credit is low. If the decedent was a citizen of a country with a U.S. estate tax treaty, the credit can increase substantially. Under the treaty coordination rule, the credit equals the full U.S. applicable credit amount multiplied by the ratio of U.S.-situated assets to the decedent’s worldwide estate.³ If U.S. property represents 20 percent of the worldwide estate, the credit is 20 percent of the full citizen exemption amount. Countries with active estate tax treaties include the United Kingdom, Canada, Germany, France, and Japan, among others.

Claiming the treaty credit requires reporting the value of the decedent’s worldwide estate on the return and identifying the applicable treaty. Skip this and the estate pays tax it does not owe.

The Qualified Domestic Trust for a Noncitizen Spouse

Property left to a surviving spouse who is a U.S. citizen qualifies for an unlimited marital deduction. That rule does not apply when the surviving spouse is not a U.S. citizen.¹¹ The deduction is available only if the property passes through a qualified domestic trust, or QDOT. A QDOT must have at least one U.S. citizen or domestic corporation trustee, must give that trustee the right to withhold tax from distributions of principal, must meet additional Treasury regulatory requirements, and requires the executor to elect QDOT treatment on the return.¹²

Property can be transferred into a QDOT after death, but the transfer or irrevocable assignment has to happen before the return is filed. Attach Schedule M from Form 706 if you claim this deduction.

The Alternate Valuation Date

If the U.S. assets dropped in value during the months after death, the executor can elect to value the property six months after the date of death instead of on the date of death itself.¹³ Anything sold, distributed, or disposed of within those six months is valued as of the disposition date instead. Two conditions apply. The election must reduce both the gross estate and the total estate and generation-skipping transfer tax liability; if only one drops, the election is not available. The election is made on the return, is irrevocable, and cannot be made if the return is filed more than one year after the deadline (including extensions).

Where to Send It and How to Pay

Mail the completed Form 706-NA and all supporting documents to:

Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999⁹

If you use a private delivery service, send it to:

Internal Revenue Submission Processing Center
333 W. Pershing
Kansas City, MO 64108

Any tax due should be paid with the return. Options include the Electronic Federal Tax Payment System (EFTPS), a same-day wire from your bank, a check or money order payable to “United States Treasury” with the decedent’s SSN or ITIN and “Form 706-NA” written on it, or cash at participating retail locations.

After Filing: Closing Letters and Transfer Certificates

The IRS does not automatically confirm that the estate’s tax account is settled. Request a closing letter through Pay.gov for a $56 fee.¹⁴ Before requesting, check the estate’s account transcript for transaction code 421, which indicates the return was accepted or that any examination is complete.¹⁵ The IRS recommends waiting at least nine months after filing before requesting.

Banks and brokerages holding the decedent’s U.S. assets may refuse to release property without proof the estate tax has been resolved. For estates of nonresidents who died after December 31, 1976, an IRS transfer certificate serves that purpose.¹⁶ If you filed Form 706-NA, fax a copy of the filed return (both pages) and any property listings to the IRS to start the process. If the estate fell below the $30,000 threshold and no return was required, submit the death certificate, the will and any codicils, a list of all U.S. assets with date-of-death values, and a signed affidavit covering the decedent’s citizenship, residence, and whether any U.S. bank accounts were used in a trade or business.

1
Internal Revenue Service. About Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return
2
eCFR. 26 CFR 20.6018-1 – Returns
3
Office of the Law Revision Counsel. 26 USC 2102 – Credits Against Tax
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Office of the Law Revision Counsel. 26 USC 6075 – Time for Filing Estate and Gift Tax Returns
5
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
6
Internal Revenue Service. Failure to File Penalty
7
eCFR. 26 CFR 20.2104-1 – Estates of Nonresidents Not Citizens; 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
9
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 2056 – Bequests, Etc., to Surviving Spouse
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Office of the Law Revision Counsel. 26 USC 2056A – Qualified Domestic Trust
13
Office of the Law Revision Counsel. 26 USC 2032 – Alternate Valuation
14
Federal Register. Estate Tax Closing Letter User Fee Update
15
Internal Revenue Service. Frequently Asked Questions on the Estate Tax Closing Letter
16
Internal Revenue Service. Transfer Certificate Filing Requirements for the Estates of Nonresidents Not Citizens of the United States