Non-U.S. citizens in the United States face some estate planning challenges when it comes to taxes. If you’re a U.S. resident, but not a citizen, the IRS will treat you similarly to a U.S. citizen. If you’re considered a resident, you’re subject to federal gift and estate taxes on your worldwide assets, but you also enjoy the benefits of the $12.06 million federal gift and estate tax exemption and the $16,000 per recipient annual exclusion in 2022. 

Understanding Residency

IRS regulations define a U.S. resident for federal estate tax purposes as someone who had his or her domicile in the United States at the time of death. Whether you have your domicile in the United States depends on an analysis of several factors, including the relative time you spend in the United States and abroad, the locations and relative values of your residences and business interests, visa status, community ties, and the location of family members.

Estate Tax Law For Nonresident Aliens

If you are a nonresident alien — that is, if you are neither a U.S. citizen nor a U.S. resident — there is good news and bad news in regard to estate tax law. The good news is that you are subject to U.S. gift and estate taxes only on property that is “situated” in the United States. Also, you can take advantage of the $16,000 annual exclusion (although you can not split gifts with your spouse).The bad news is that your estate tax exemption drops from $12.06 million to a miniscule $60,000, so substantial U.S. property holdings can result in a big estate tax bill. Taxable property includes U.S. real estate as well as tangible personal property (such as cars, boats and artwork) located in the United States.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.