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What Taxes Must a Foreign National Pay?

Question: My husband is a foreign national. What taxes will he pay if he inherits my assets—a whole life insurance policy and a 403(b) account?

— Rita Kushner, New York City

Answer: It depends largely on where he hangs his hat. If Uncle Sam considers your husband a resident for tax purposes (check IRS Publication 519 for guidelines), federal taxes apply as if he were a citizen, says Henry Alden, an international tax specialist at Everest International Group in Annapolis, Md. (States have their own laws.) If he’s not a resident, he could avoid a tax hit if there’s a favorable income-tax treaty with his country of residence, says Alden. The good news? The death benefit on your insurance policy will likely be tax-exempt—regardless of where your husband lives.


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