IRS Form 706-NA: US Estate Tax Return for Non-Resident Non-Citizens

Who Has to File

If a person who was neither a US citizen nor a US domiciliary at the time of death owned US-situs assets with a combined value exceeding $60,000, the executor must file IRS Form 706-NA. That threshold is not a typo — while US citizens and domiciliaries have a $15 million basic exclusion for 2026 deaths, the statutory credit for non-resident non-citizens is just $13,000, which shields exactly $60,000 of assets.

A modest portfolio of US stocks can easily cross this line. So can a single piece of US real estate or tangible personal property physically located in the US. Ordinary deposits with US banks are generally not US-situs assets for this purpose.

What Counts as US-Situs Assets

The IRS defines US-situs assets for estate tax purposes:

• Real property located in the US — houses, condos, commercial buildings, land, and timeshares
• Tangible personal property physically situated in the US — vehicles, artwork, jewelry stored in the US
• Stock issued by US corporations — this is the one that catches most people. Apple, Microsoft, and Tesla shares create US-situs exposure even when held through a foreign brokerage account in London or Hong Kong
• Debt obligations of US persons (with some exceptions for bank deposits and portfolio interest)

Notably, bank deposits with US banks in the ordinary course of business are generally exempt from US-situs classification for estate tax purposes, as are certain portfolio debt obligations. Life insurance proceeds paid by US insurers on the life of a non-resident non-citizen are also excluded.

The Filing Deadline and Extensions

Form 706-NA is due 9 months from the date of death. The executor can request an automatic 6-month extension by filing Form 4768 before the original deadline.

This 9-month window creates real pressure in cross-border estates, where gathering worldwide asset valuations, retaining US tax counsel, and obtaining the necessary documentation from foreign jurisdictions takes time. Filing the extension is almost always the prudent choice.

Tax Rates and Calculation

The estate tax on US-situs assets above the $60,000 threshold follows the same graduated rate schedule as for US citizens: rates start at 18% and climb to 40% on amounts exceeding $1 million.

Without treaty relief, the math is punishing. A non-resident non-citizen who dies owning a $500,000 US condo and $200,000 in US stock has $700,000 in US-situs assets. After applying the $60,000 exemption, the taxable estate is $640,000, generating a tax bill of roughly $200,000.

How Estate Tax Treaties Change the Calculation

This is where the difference between $60,000 and the $15 million 2026 basic exclusion becomes accessible. The US has bilateral estate tax treaties with 16 countries: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, Norway, South Africa, Switzerland, and the UK.

Several of these treaties — particularly the UK, Canada, Germany, and France agreements — allow the estate to claim a prorated share of the full US unified credit. For 2026 deaths, the full basic credit amount is $5,945,800 (corresponding to a $15 million basic exclusion). The formula:

Prorated Credit = Full US Citizen Credit × (US-Situs Assets ÷ Worldwide Gross Assets)

Using the example above: if the $700,000 in US assets represents 20% of a $3.5 million worldwide estate, and the decedent was a UK national, the estate claims 20% of the $5,945,800 credit — roughly $1.19 million. Since this exceeds the estimated US estate tax on these assets, the entire US estate tax is eliminated.

To claim treaty benefits, the executor must file Form 706-NA with Form 8833 (Treaty-Based Return Position Disclosure) attached. The worldwide estate must be fully valued and disclosed, even though non-US assets are not subject to US tax.

The Transfer Certificate Bottleneck

After filing, the IRS issues a Transfer Certificate (Form 5173) confirming that all estate tax obligations have been resolved. Until this certificate arrives, US financial institutions will freeze the deceased's accounts indefinitely.

This is not a theoretical concern. US financial institutions typically keep US-based accounts frozen until the executor presents the Transfer Certificate, and the IRS can take months to process the application. This can delay distribution of those assets to beneficiaries and hold up the estate settlement.

Common Filing Mistakes

Failing to claim treaty benefits. The IRS does not apply treaty provisions automatically. If the estate qualifies under a bilateral treaty, the executor must affirmatively elect treaty-based treatment by filing Form 8833.

Underreporting worldwide assets. Treaty-based prorated credit claims require full disclosure of the worldwide estate. Omitting foreign assets does not reduce the tax — it disqualifies the treaty claim entirely.

Missing the deadline without an extension. Late filing triggers penalties and interest. The extension request (Form 4768) is simple and should be filed as a matter of course in any cross-border estate.

If you are managing an estate with US-situs assets belonging to a non-resident non-citizen, the International Estate toolkit includes the complete 706-NA filing workflow, treaty benefit calculations, and document checklist to keep the process on track while you coordinate parallel filings in other jurisdictions.