Did you know that if you are a Resident Alien (RA) or a Non-Resident Alien (NRA), you are subject to a different estate and gift tax structure than U.S citizens? Most non-US citizens are oblivious of the impact of US death taxes until tragedy strikes in their own home or in the home of a close friend or family member. That experience is eye-opening for an innocent non US citizen spouse who inadvertently transfers over assets of her deceased spouse after his death into her name thinking she was rightfully claiming what is (or should be) hers.
Most of us are aware that a US citizen may make unlimited lifetime gifts to his or her U.S. citizen spouse without gift tax consequences because the gifts will qualify for the unlimited gift tax marital deduction. Code § 2523. However, non US citizen spouses are not that fortunate. Based on the type of visa status they have in the United States, the taxation system is very different for estate and gift taxes.