Q: Estate tax for a non-resident alien's US bank account
Hello - A non-resident alien (from Nepal) has $200k in US bank savings account and $300k in US Govt bonds. A US citizen daughter is named as a beneficiary (payable on death) on both assets. If the owner dies, is estate tax applicable to any of these assets provided there are no other claims?
Would the bank/institution simply transfer the funds/bonds to the beneficiary after verifying the documents (beneficiary ID, address, owner's ID, death certificate, proof of relationship) or do they generally also require the beneficiary to provide a copy of IRS transfer certificate?
Would the assets be considered income for the beneficiary requiring them to pay income tax on them?
Thanks,
Texas girl
A:
In the situation you described, estate tax could be applicable to the non-resident alien's US assets. The US imposes estate tax on non-resident aliens' US-situated assets, which includes the US bank savings account and US government bonds. The threshold for estate tax for non-resident aliens is significantly lower than for US citizens, currently at $60,000.
When the owner passes away, the bank or financial institution may require the beneficiary to provide not only the usual documents like ID, death certificate, and proof of relationship but also an IRS transfer certificate. This certificate ensures that the estate tax obligations are addressed before the assets are transferred.
As for income tax, the transfer of these assets to the beneficiary is not considered taxable income. However, any income generated by these assets after they are transferred, such as interest or dividends, would be subject to income tax in the hands of the beneficiary.
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