The Sixty Thousand Dollar Line

For the estate of a nonresident who is not a citizen of the United States, the statute allows a unified credit of thirteen thousand dollars against the estate tax imposed on US-situated assets. A separate, far larger applicable credit governs the estate of a US citizen or a person domiciled in the United States. The gap is not a rounding difference: it is the difference between an exemption measured in tens of thousands and one measured in millions, applied to the same assets held by two different people.

The thirteen-thousand-dollar credit is conventionally described as exempting about sixty thousand dollars of US-situated assets, because that is roughly the amount of estate the credit offsets under the applicable rate table. That sixty-thousand figure is a derivation from the credit, not a number the statute states; the statutory quantity is the credit itself. Both are worth knowing, because practitioners and IRS consumer material overwhelmingly speak in terms of the sixty-thousand equivalent while the law speaks in terms of the credit.

Shares of stock owned by a nonresident who is not a citizen are deemed property within the United States only if issued by a domestic corporation — so a holding in an American company held through any broker, anywhere, is US-situated. Also deemed within the United States: debt obligations of a United States person, and of the United States, a State or the District of Columbia; deposits with a domestic branch of a foreign corporation engaged in commercial banking; and property the decedent transferred in the circumstances sections 2035 to 2038 describe, if situated here at the transfer or at death. US real estate is the case most people already expect.

The amount receivable as insurance on the life of a nonresident who is not a citizen is not deemed property within the United States. Also outside: deposits with a foreign branch of a domestic bank engaged in commercial banking, and debt obligations whose interest would qualify for the portfolio-interest exemption. The insurance rule is the practically important one, because it means a policy can sit outside the US estate while a brokerage account holding American shares sits inside it.

The United States has estate and/or gift tax treaties with a limited group of countries — Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. India is not among them. A treaty can raise the effective exemption or shift which country may tax an asset; with no treaty in force, none of that relief applies. This is a case where the India–US income tax treaty, which does exist, provides no help at all — the two are separate instruments.

The estate tax rules for a 'nonresident not a citizen' turn on domicile: broadly, living somewhere with no present intention of leaving. That is a subjective, facts-and-circumstances question about intent and ties, and it is NOT the Substantial Presence Test that decides income tax residency. The two can disagree for the same person in the same year: someone who is a US tax resident by day count may still not be domiciled here, and someone on a long-term visa who has built a life here may be domiciled even while intending to return one day. Nothing on this page can settle which you are.