International Tax – nonresidents and the US estate tax

The answer is US nonresident tax can easily kick in under the estate tax. And its pretty easy to end up owing the US government an estate tax if you pass away owning US assets (and you are not a US citizen).

US Nonresident Tax and the Estate Tax

Basically, the estate tax threshold for those considered nonresident in the US but having US assets that are subject to the estate tax is very low – you could end up owing. Or, to be more precise – your estate would end up owing nonresident tax. You see, the estate tax for nonresidents kicks in at $60,000 and above. If you have assets in the US (real estate, stock portfolio, etc.), then you could very easily get over the $60,000 mark. US citizens enjoy an estate tax exemption of ~$11M right now ($22M for married folks), so they do not get caught in the US estate tax easily. In fact, it is pretty rare for a US Citizen to have to pay an estate tax on their assets in the US.

So, it is wise to determine why you are avoiding or delaying becoming a US citizen (if you are). Some people do not want to be US citizens for very specific reasons; they prefer to retain their home country citizenship. If there is no monetary reason for doing so, you should evaluate whether it makes sense to do some estate planning around your US assets (and/or your other worldwide assets, too).

Estate Tax Return – Will I need to file one?

International Tax and nonresident tax
Estate Planning can reduce your exposure to the estate tax

Another thing to consider is whether you will be expected to file an Estate Tax return. You will if the US nonresident tax – estate tax variety, is due. You will if your assets are over $60k, but you may need to file one even if you are under $60k in US assets. Not all assets are liable for the US estate tax, even if they are in the US. Additionally, there are several exceptions to the rule. So, you should see and Estate Planner or a Tax Attorney that can advise you about US International Tax and Estate Tax issues affecting nonresidents.

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