This post was originally published on May 3rd, 2024, and updated on May 30th, 2025.
Form 706-NA is a federal estate tax return required for nonresident aliens who own property in the United States at their death. In the realm of trust and estate planning, this form ensures that U.S. estate taxes are properly assessed and collected on U.S.-situated assets. Unlike U.S. citizens and residents, nonresident aliens are only entitled to a limited estate tax exemption, $60,000, making it critical to account for and report these assets accurately. Form 706-NA functions under Internal Revenue Code Section 2101 and is a core tool for executors managing estates with international implications.
Understanding who must file Form 706-NA and when is essential for compliance. This section breaks down the necessary criteria and submission deadlines.
Form 706-NA must be filed if the decedent was a nonresident alien who owned U.S.-situated assets at the time of death and the total value of those assets exceeds $60,000. Executors, administrators, or other individuals in control of the decedent’s U.S. assets are responsible for submitting the return, regardless of whether the decedent had a will or the estate is administered under intestacy laws.
The return must be filed within nine months of the nonresident alien’s death. If more time is needed, a six-month extension can be requested using IRS Form 4768. However, any estimated estate tax must be paid by the original due date to avoid penalties and interest.
Missing the filing deadline can result in substantial penalties. The IRS imposes a 5% penalty of the unpaid tax for each month the return is late, up to a maximum of 25%. In addition, there is a monthly penalty of 0.5% on unpaid taxes and interest charges from the original due date until payment is made.
Filing Form 706-NA involves gathering extensive documentation and accurately reporting U.S.-situated assets. This section outlines the steps and resources involved in the filing process.
To complete the form, the estate’s representative must collect a certified copy of the death certificate, a list of U.S.-situated assets (including real estate, tangible property, and U.S. company stocks), documentation of debts or mortgages tied to those assets, and a translated copy of the will or other relevant legal documents.
The completed Form 706-NA should be mailed to:
Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999-0023
USA
As of 2025, electronic filing is not available for Form 706-NA.
If a tax professional is filing the form on behalf of the estate, the filing must include either IRS Form 8821 (Tax Information Authorization) or Form 2848 (Power of Attorney), allowing the IRS to communicate with the authorized representative.
The structure of Form 706-NA helps the IRS assess the taxable value of U.S.-based assets. This section explains the critical parts of the form.
Schedule A requires reporting the fair market value of U.S.-located property such as real estate, tangible personal property, stock in U.S. corporations, and certain bank deposits and securities. Each asset should be valued as of the date of death.
This schedule accounts for deductions for debts and mortgages directly tied to U.S.-situated property. These may include mortgage loans, property tax debts, and funeral expenses incurred within the U.S. Foreign debts are only deductible if they are linked to U.S. assets, and the estate return proportionally includes non-U.S. assets.
Schedule C covers lifetime transfers of U.S. property by the decedent if they retained an interest in the asset or if the transfer occurred within three years of death. It also includes U.S. annuities with obligations that extend beyond the decedent’s lifetime.
The IRS uses Form 706-NA to determine the estate tax liability on U.S.-based assets. This section walks through how the calculation works.
The gross estate includes the fair market value of all property situated in the U.S., including real estate, tangible and intangible assets, and interests in U.S. corporations. Property located outside the U.S. is excluded from the calculation.
Deductions help reduce the taxable estate, including debts secured by U.S. property, administration expenses for managing the U.S. estate, and charitable contributions to qualified U.S. organizations.
The first $60,000 of the estate's U.S. assets is exempt. Any value above that threshold is taxed at graduated rates ranging from 18% to 40%, depending on the total taxable value. The applicable tax brackets can be reviewed on the IRS Estate Tax Tables page.
Form 706-NA serves multiple purposes in cross-border estate administration and planning for nonresident aliens.
The form enables the estate to claim benefits under U.S. estate tax treaties, potentially reducing or eliminating the tax due. These treaties may allow foreign tax credits or allocate taxing rights, helping avoid duplicate taxation on the same assets. Notable treaty countries include Germany, France, and Canada.
By properly filing Form 706-NA, the estate demonstrates compliance with U.S. tax laws. This avoids penalties and facilitates asset distribution and legal recognition of the estate in U.S. courts, streamlining the administration process.
Estate planners often advise using structures that keep U.S. assets outside the scope of estate taxation. These include holding assets through foreign corporations, placing U.S. assets into irrevocable foreign trusts, or reassigning beneficial ownership in ways that remove them from the decedent’s estate under U.S. rules. Each approach requires careful legal and tax analysis to ensure global compliance.
Since estate taxes must generally be paid in cash, planning for liquidity is essential. Estates often use life insurance policies payable to the estate or maintain readily accessible funds outside the U.S. to meet tax obligations without selling off U.S. property at unfavorable terms.
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