US Persons for Transfer Tax Purposes

Who are considered US persons for transfer tax purposes and why is this important?

US persons for transfer tax purposes are:

  • all US citizens, regardless of where they live;
  • all other non-US citizens domiciled in the US.

The estate of US domiciliaries has a tax exemption amount of $ 11.2 million. By contrast, the estate of non-US domiciliaries has a tax exemption amount of only $ 60,000.

Please keep in mind that some bilateral tax treaties raise the estate tax exemption amount for citizens of that country.

Domicile means living somewhere with no definite present intention of moving. “Home is here for now.” A person can have several residences, but only one domicile.

The IRS does not use the term “domicile”, but “resident”. This is confusing, because being a “resident for transfer tax purposes” is different than being a “resident for income tax purposes.”

Whether a person who resides in the US is domiciled in the US is decided subjectively, based on all circumstances:

  • Statements of intent as set forth on
    • visa applications
    • tax returns,
    • wills, etc.
  • Length of residence in the US;
  • Green card;
  • Rented or owned home in the US and abroad; house vs. condo, size of the home;
  • Ties to the other country;
  • Country of citizenship;
  • Location of business interests;
  • Social network,
  • Voting registration,
  • Driver’s license.

Green card holders, holders of other types of visa, and illegal aliens may or may not be US domiciliaries.

For example, a retired green card holder who spends most of her time in her home country and visits the US every few months is most likely not a US domiciliary.