Eerst leven, dan sterven, in de US - but now: taxes !

[Joke]

Als je verder nog vragen hebt, ik zal proberen om antwoorden te vinden hier op kantoor.

[Marcel]

Ook op het forum van USA Dutch was dit onderwerp al eens ter sprake gekomen en bleef het een beetje rondzingen. Ik ben daarom nog eens op zoek gegaan naar informatie (en dan vooral de originele regelgeving) die het artikel waarnaar Joke eerder verwees ondersteunen. Dit is wat ik op USADutch over mijn bevindingen schreef:

I have been digging some more into the subject and this is what I found:

1) In 1988 the Technical and Miscellaneous Revenue Act (TAMRA) was passed. Since then, a surviving spouse who is NOT a US citizen is no longer allowed a marital deduction for property passed to him/her from the estate of his/her deceased spouse. This law is still in effect and has not changed since then. Relevant articles can be found in the Internal Revenue Code (IRC) section 2056, more specifically:
- (d)(1): general rule that no estate tax marital deduction will be allowed if property passes to a surviving spouse who is not a US citizen;
- (d) (2): permits a marital deduction for property passing in trust (a qualified domestic trust) to the surviving non-US citizen spouse

2) However, the fact that a surviving non-US citizen spouse does not have any marital deduction (as opposed to an unlimited marital deduction for a surviving US citizen spouse), does NOT mean that he/she has to pay taxes over ALL of the inherited estate in ANY case. That is because you are ONLY required to file an estate tax return (IRS form 706) IF the gross estate (including among others life unsurance proceeds payable to the surviving spouse), plus any adjusted taxable gifts and specific gift tax exemptions is MORE than the filing requirement for the year of death. This filing requirement for 2005 is $1.5 million, for 2006-2008 it is $2 million and for 2009 it is $3.5 million. The amount of the filing requirement is actually the so called 'unified credit' which is allowed to the estate of every decedent against the imposed estate tax (see IRC section 2010). So, as long as you are not required to file an estate tax return, there is no problem, no matter what the surviving spouse's citizenship. General information about estate tax and filing an estate tax return can be found in IRS publication 950.

3) If you do have to file an estate tax return (so the estate is worth more than the amounts specified for the various years), then there is indeed a difference depending on citizenship. In that case tax would be owed over the taxable estate, which equals the gross estate minus all the deductions (funeral expenses, debts owed, marital deduction). A surviving US citizen spouse would still have to pay no tax thanks to his/her unlimited marital deduction, which generally equals the value of all property passed on. Therefore: gross estate minus marital deduction leaves a taxable estate of zero. A surviving non-US citizen spouse on the other hand has no marital deduction at all, so in his/her situation the taxable estate would equal gross estate minus funeral expenses and debts. That can still be an awfull lot of tax to be paid (over the amount that exceeds the filing requirement or 'unified credit'. To avoid this, a Qualified Domestic Trust (QDT or QDOT) can be a good solution. This fairly recent article deals with this issue and gives an example.

My overall conclusion based on the 3 previous points: As long as the filing requirement is in the millions of dollars, the whole exclusion of marital deduction for surviving non-US citizen spouse will not be an issue for most people. It is wise to keep an eye on the annual filing requirements as they develop over time. If they would ever go down a lot, more alien residents may have a potential problem.

This whole issue full of legal and tax stuff is quite complicated and when you search around it is easy to find contradicting and confusing information. The missing thing in many articles is the fact that you are only required to file an estate tax return in any situation if the estate exceeds the filing requirements. I have also been lead astray regarding this issue when I first heard about it and started looking for info. I believe however that the information above (with references to the original legislation) is indeed correct. I am sure there is more to say about various situations regarding estate tax (e.g. joint tenancy, gifts, etcetera), but for now I think this will suffice. All relevant estate tax legislation can be found in Title 26 "Internal Revenue Code" under Subtitle B "Estate and Gift Taxes", Chapter 11 "Estate Tax", Subchapter A "Estates of Citizens or Residents" (see the index to the IRC).

There is one more thing to bear in mind. This whole story is about federal estate tax. Additionally, some states also impose a state estate tax. Check out if your state is one of those, so you can be prepared.

Kortom, voor de niet-miljonairs onder de Neder-Amerikanen is er met de huidige wetgeving en 'unified credits' geen reden tot zorgen wat estate tax betreft. [/url]

[USInsider]

Hoi Marcel, wat fijn dat je alles nogmaals hebt doorgespit en op een rijtje gezet ! Dit is hoe ik het in eerste instantie had begrepen maar toen ik hier sommige bijdrages las begon ik me zorgen te maken. Ik vroeg advies hier aan een elderly-law attorney en aan een belastingadviseur en kreeg twee verschillende maar beide klaarblijkelijk onjuiste antwoorden. Daarop sloeg toch de paniek wat toe.

Waar ik het spoor nog bijster raak is waarom veel publikaties een vrijgesteld bedrag van 117.000 (127.000 ?) dollar blijven hanteren. De logica daarvan ontgaat me volledig als er - voor dit jaar - 750.000 dollar is vrijgesteld. (Jij noemt 1,5 miljoen, maar dat is toch alleen als beide parters sterven en de estate naar kinderen/familie gaat.)

Overigens 750.000 dollar lijkt veel geld en dat is het ook, maar realiseer je dat het overgrote deel van de US werkers geen premie betaald voor een gegarandeerd bedrijfspensioen, maar zelf moet sparen in een zg. 401(k) plan. Een echtgenoot met enig verantwoordelijkheidsgevoel zal verder zorgen voor een redelijke levensverzekering. Plus er is "overwaarde" in huizen omdat de prijzen gestegen zijn, dat is geld dat je alleen op papier hebt, niet in de bank, tenzij je je onderkomen verkoopt.