A Must-Read for Non-U.S. Persons: The $60,000 U.S. Estate Tax Trap
Many Taiwanese investors are enthusiastic about buying U.S. stocks through offshore brokerages, but they overlook a fatal risk: if you unfortunately pass away while holding U.S. assets, the Internal Revenue Service (IRS) will slap your family with a U.S. estate tax of up to 40%!
1. A World of Difference in Exemptions: Foreigners Get Only $60,000 U.S. citizens enjoy a massive estate tax exemption of up to $13.61 million, but for foreigners without U.S. tax status, the estate tax exemption is a mere $60,000 (less than 2 million NTD)! As long as the total value of your U.S. assets exceeds $60,000, the excess amount will be subject to a hefty tax rate ranging from 18% to 40%.
2. Which Assets Are Subject to the Tax?
- Must Be Taxed: U.S. real estate, and stocks and ETFs issued by U.S. companies (e.g., Apple, Tesla, VOO, QQQ, etc.).
- Exempt from Tax: Pure cash deposits in U.S. physical banks, U.S. Treasury bonds, and stocks issued by non-U.S. companies (e.g., TSMC ADR).
3. Accounts Are Instantly Frozen; Families Must "Find the Money to Pay Taxes First" After an investor passes away, U.S. brokerages will immediately freeze their accounts. Family members cannot directly sell the stocks for cash; they must pay out of pocket and wire cash from overseas to settle the up to 40% estate tax with the IRS first. Only after the IRS confirms receipt and issues a Transfer Certificate will the brokerage unfreeze the assets. This entire process often drags on for 1 to 2 years.
USCPA Luo Xia reminds you:
If you hold substantial U.S. stock positions or U.S. real estate, do not let your wealth be intercepted by the IRS during wealth transfer. Before expanding your U.S. investment portfolio, be sure to consult a U.S. Certified Public Accountant (CPA) who is familiar with international taxation and tax filing rules for U.S. expats to ensure full compliance while saving on taxes with peace of mind.
If you have any questions or need further help,
please contact us at the USCPA Luo Xia +886 980919600
or Email: ustaxproservice@gmail.com
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