The table below shows when the IRS considers US property owned by nonresidents to be subject to estate taxes (paid upon death of the nonresident) and gift taxes (when US property and assets are transferred without consideration) during the nonresidents life.
ESTATE TAX GIFT TAX
|Estate Tax||Gift Tax|
|Tangible Personal Property in U.S. (e.g., artwork, jewelry)||X||X|
|Currency in U.S. Safe Deposit Box||X||X|
|Cash Deposits in a U.S. Bank||X||X|
|U.S. Real Estate||X||X|
|Non-U.S. Real Estate||X||X|
|U.S. Government and Corporate Bonds||X||X|
|U.S. States/Muni Bonds||X||X|
|U.S. Partnership/LLC Interest||Depends (a)||X|
|Life Insurance Cash Value||X||X|
|Life Insurance Death Benefits||X||X|
(a) The law is not clear and interpretations go both ways with respect to US situs of assets and situs of acutal partnership or LLC interest.
The table below shows the differences between estate and gift taxes paid by a citizen or permanent resident from that which is paid by a nonresident (NRA) including tbe differences in exemptions, and other rules.
|Estate Tax Exemption Amount||$5,430,000 per person||$60,000 per person|
|Top Estate and Gift Tax Rate||40%||40%|
|Lifetime Gift Tax Exemption Amount||$5,430,000 per person||$0|
|Annual Gift Tax Exclusion Amount||$14,000 per donee||$14,000 per donee|
|Gift Splitting Between Spouses||Yes, if both spouses are U.S. people||No|
|Marital Deduction for Lifetime Gifts||Unlimited if recipient spouse is a U.S. citizen||$147,000 per year if recipient spouse is a non-U.S. citizen4|
|Marital Deduction for Testamentary Bequests||Unlimited if recipient spouse is a U.S. citizen||$0, if recipient spouse is a non-U.S. citizen, unless assets are held in a Qualified Domestic Trust|
|Gift Tax Exclusion for Direct Payment of Medical and Education Expenses||Yes||Yes|
|Portability of Decedents Exemption||Yes||No|
If you are a nonresident and need estate tax or gift tax planning for your US assets contact us at firstname.lastname@example.org.