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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
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Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I am a resident alien. My father is a non-resident alien. He

Customer Question

I am a resident alien. My father is a non-resident alien. He wants to deposit money (+$60k) in the US which I am supposed to inherit one day free of US estate tax (it cannot be transferred under my name at this time). I heard that certain types of bank accounts will not be part of his taxable estate (IRC 2105?). Which specific account types are not included in the taxable estate or exempt? If he transfers the money to a regular checking account at a US bank, will I be able to inherit free of estate tax? Are there other "estate tax free" account types?
Submitted: 3 years ago.
Category: Tax
Expert:  Jax Tax replied 3 years ago.

Jax Tax : As he is a non resident alien, he will not be subject to estate tax so any type of account will be fine. As far as inheriting the money, the same is true. Regardless of where the money is when he passes, you will receive the inheritance tax free. The US does not tax inheritances. In short, you can do with it what you want, put it in any bank account, and there will be no tax on the inheritance. I would reccomend putting the money in a joint bank account where you own the account as tenants in common with the right to suvivorship also called tenancy by the entirety. Most banks offer this.
Customer:

Thank you for your quick reply. I was confused because I heard there is only a $13k tax credit for non resident alien decedents. I was afraid I could be on the hook being the recipient of the US asset. A joint bank account with right to survivorship would be easy to set up. Could the IRS argue this is a gift completed in the US and tax me as the recipient. I hope this doesn't sound paranoid.

Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1377
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Jax Tax and 4 other Tax Specialists are ready to help you
Expert:  Jax Tax replied 3 years ago.
The bank account will be file. You are confusing gift tax exclusion $13k with inheritance issues. There is no inheritance tax a gift tax is paid by the person giving the gift not the receipient. You will be fine. No tax whatever happens.
Customer: replied 3 years ago.
I did some more online research and found that for non-resident aliens US estate tax does applies to property with US situs (IRC 2101(a), 2103, 2106(a). Would a checking or money market account be considered non-US situs property which can be passed free of tax?
Expert:  Jax Tax replied 3 years ago.
Stop doing online research. What you are decreeing to is when a nonresident non citizen inherits property from a US citizen/resident. This does not apply to you.

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Jax Tax
Jax Tax
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JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions