- U.S. Estate Tax Issues
- U.S. Income Tax Issues
- U.S. Citizens in Canada
- IRS Audits and Negotiations
- U.S. Tax Court
- Coordination with Tax Accountants and their preparation of tax returns, disclosure statements, reporting forms and related matters.
Canadian Non-U.S. Residents Owning Washington Real Estate and U.S. Estate Tax
- Canadian Non-Residents with U.S. based assets including U.S. Real Estate valued at $60,000 USD or less are exempt from U.S. Estate Tax . And in this case, a U.S. Estate Tax Return (Form 706-NA) would not be required. Nonetheless, if the Canadian Non-Resident owned U.S. Real Estate it is recommended to obtain a Transfer Certificate from the IRS before any transfer of the U.S. Real Estate is made from the decedent’s estate to the beneficiaries. If the U.S. based assets including the U.S. Real Estate are valued at $60,000 USD or more, a U.S. Estate Tax Return (Form 706-NA) is required to be filed within nine (9) months of the date of death.
- In order to determine if there would be any U.S. Estate Tax due, there is a formula under the U.S.-Canada Tax Treaty. If the decedent was a Canadian resident but not a U.S. citizen at the time of death, the estate can take a “pro-rata” unified credit to compute U.S. Estate Tax. The pro-rata credit is determined by multiplying the exclusion amount available to a U.S. citizen decedent by a fraction of the value of the decedent’s U.S. based assets over the value of the decedent’s world-wide assets.
- Normally, there is no U.S. Estate Tax due if the value of the worldwide assets does not exceed the maximum amount, which is adjusted annually. In 2018, the maximum amount is about $11.2 Million USD. But if the worldwide assets exceed the formula or the $11.2 Million USD there may be U.S. Estate Tax due (which can be around 40%). After the U.S. estate tax return is filed and any tax is paid, the IRS should issue a Transfer Certificate for any future transfer of the U.S. real estate.