As someone who is not a citizen of the United States and bequeaths or inherits an estate or gift situated in the U.S., you are subject to taxation of gifts and worldwide estates. Because requirements for reporting and paying gift and estate taxes are so complex, foreign investors are encouraged to enlist the professional services of an experienced international tax expert in Bellingham, MA. CPA Ann Irons offers insights into tax planning for non-U.S. citizens.

Estate Taxes for Non U.S. Citizens

One source of confusion is that differentiating between residents and nonresidents for purposes of determining domicile are different from those used to differentiate between the two groups for income tax purposes. If a non-U.S. citizen plans to reside permanently within the United States and is physically present, he or she is said to have acquired a domicile in the U.S. In doing so, the estate of the domiciliary is subject to the estate tax. If the decedent is not a U.S. citizen and does not have a domicile within the U.S. at the time of death, he or she is considered a non-domiciliary.

Gift Taxes for Non-U.S. Citizens

Determining whether an individual is a domiciliary or a non-domiciliary for purposes related to gift taxes are the same as those used in estate taxation—again, different from income tax requirements. We can classify gifts as either tangible or intangible. Intangible property given as a gift is generally not subject to gift taxes; examples include mutual fund shares, corporate stock, and bonds. Tangible gifts are taxed and can include real estate and personal property, such as jewelry or fine art, kept within the United States. For tax purposes, checks and cash are classified as tangible gifts. In some cases, even wire transfers are subject to taxation.

Tax Planning and Preparation

The amount of tax paid on estates and gifts may be reduced or even eliminated with a sound tax planning strategy in place. Your international tax accountant will discuss in detail your available options. For example, it may be possible to make tax-free transfers by setting up a bank account in the United States, then specifying a donee for the account, usually a child or spouse. Note that tax treaties may eliminate or reduce gift and estate taxes if present between the United States and the country of domicile of a non-domiciliary.

Questions for your Bellingham, MA tax preparer? To learn more about our services, or to schedule a meeting with Ann Irons, CPA, LLC, contact us at (508) 966-0700. Our accounting office offers payroll, tax preparation, and bookkeeping services to businesses, individuals, and investors based in Bellingham, Worcester, Medway, Milford, and the surrounding areas.