What IRS Form 706 Is For
Form 706, issued by the Internal Revenue Service, serves as the official federal estate tax return for a deceased person’s estate. It reports the total fair market value of all decedent’s assets, including real estate, bank accounts, and taxable gifts made during the decedent’s lifetime. The estate’s executor or personal representative uses the form to determine whether the estate exceeds the filing threshold and owes tax to the United States Treasury.
Executors also use it to transfer any unused exemption to a surviving spouse through the deceased spousal unused exclusion. Filing Form 706 ensures compliance with federal tax laws, accurate reporting of the decedent’s gross estate, and proper calculation of any estate tax due.
Executors who need a broader overview of related estate, gift, and trust reporting requirements may refer to our Estate, Gift, and Trust Forms Complete Guide to Filing, which provides detailed instructions and contextual explanations that support accurate preparation of IRS Form 706 for the 2025 filing year.
When You’d Use IRS Form 706
Executors file IRS Form 706 when the estate exceeds the federal exemption set by the Internal Revenue Code, which determines whether its total value, including lifetime gift tax amounts, requires a return. Filing also applies to estates that fall below the exemption amount but elect to transfer the unused portion to a surviving spouse.
- Executors must file Form 706 if the estate includes exemptions or taxable transfers that alter the federal estate tax calculation.
- The estates of individuals who were not citizens of the United States may have different filing requirements under federal estate tax law.
- The form also serves as the generation-skipping transfer tax return when applicable.
Timely filing allows executors to calculate estate taxes accurately and comply with all federal reporting rules.
Key Rules and Details for IRS Form 706
The Internal Revenue Service establishes specific requirements for estates filing Form 706 for 2025. The filing obligation applies to estates that meet the federal exemption threshold of $13,990,000 or elect portability for a surviving spouse. Executors must submit the return within nine months of the decedent’s death, with an option to request an extension of up to six months using Form 4768.
Nonresident aliens and individuals who were not citizens of the United States may have separate filing requirements under federal tax law. These estates must report all U.S.-based property, including real estate and investments held at the time of death. Executors must follow the same procedural standards to ensure accuracy in reporting.
These rules ensure consistency, compliance, and transparency throughout the 2025 filing period.
Step-by-Step (High Level)
The United States estate tax filing process requires accuracy, organization, and proper documentation. Executors must follow each stage carefully to ensure that all asset details, valuations, and deductions are correctly reported for the applicable tax year. Each step must follow federal standards for estate and generation-skipping transfer tax reporting.
- Step 1: Gather essential records, including the will, death certificate, and an inventory of all assets as of the date of death.
- Step 2: Calculate total asset values, determine deductions, and apply any applicable credits.
- Step 3: Review computations and confirm all required schedules are attached before submission.
- Step 4: File the completed return and pay any amount due, including interest if applicable.
This structured process supports accurate and compliant estate administration.
Common Mistakes and How to Avoid Them
Executors filing a taxable estate must take steps to prevent frequent errors during estate administration. The Internal Revenue Service requires accurate, organized, and timely reporting for every submission. The following issues are common but can be avoided through careful preparation and attention to filing procedures.
- Missing Information: Review all entries for accuracy, including the decedent’s Social Security number and attachments such as the income tax return.
- Incorrect Valuations: Hire qualified appraisers to determine fair market value before calculating the taxable estate.
- Late Submissions: File early or request an extension within the permitted timeframe to prevent penalties.
- Improper Mailing: Use an IRS-approved private delivery service to confirm the timely delivery of Form 706.
These preventive measures promote compliance and support smoother estate administration.
What Happens After You File
The Internal Revenue Service reviews each estate tax return to confirm that the reported figures match the submitted documentation. Processing times vary depending on the estate’s size, asset types, and accuracy of submitted schedules. Executors should maintain organized records of all correspondence and ensure that any follow-up requests are answered promptly.
If the IRS accepts the filing, the executor may request an Estate Tax Closing Letter through Pay.gov for formal confirmation. The executor may also obtain an account transcript, which provides the same information about acceptance status. Maintaining accurate copies of all forms, including those related to the estate’s income, is essential for future reference.
Maintaining follow-up after submission demonstrates diligence and accountability in estate administration. Consistent communication and careful recordkeeping ensure transparency and compliance throughout the estate administration process.
FAQs
What is the due date for filing Form 706?
The due date for filing Form 706 is nine months after the deceased person’s death. Executors may request an automatic six-month extension using Form 4768 if more time is needed to complete documentation. Filing and payment deadlines differ, so any tax due must still be paid on time to the Internal Revenue Service.
What is the exemption amount for 2025?
The exemption amount for 2025 is $13,990,000, which determines whether an estate must file a federal return. This amount includes the total value of the estate plus any adjusted taxable gifts made during the deceased person’s lifetime. Estates below this threshold may still file to preserve portability benefits for the surviving spouse.
How does the deceased spousal unused exclusion (DSUE) work?
The DSUE amount allows a surviving spouse to use the unused portion of the deceased spouse’s federal exemption. Executors must elect portability on a timely filed Form 706 to claim this benefit. Filing ensures accurate calculation and recording of the transferred exemption.
How can nonresident aliens file Form 706?
Nonresident aliens must report U.S.-situated assets and follow different filing procedures for estate and generation-skipping transfers. These estates use the same form but may require additional documentation. Executors should review IRS instructions for the estates of individuals who were not U.S. citizens.
What is the purpose of an estate tax closing letter?
An estate tax closing letter confirms that the Internal Revenue Service has accepted the return. Executors can request it through Pay.gov after the IRS finishes reviewing the estate’s information. It provides formal closure for estate administration purposes.
Where can I find additional information about Form 706?
Executors can visit the IRS Form 706 page for current filing instructions and updates. The website provides detailed guidance on asset valuations, fair market value reporting, and the necessary supporting attachments. Additional information is also available in IRS Publication 559 for survivors, executors, and administrators.
Executors who need access to related federal estate and gift tax materials may visit our Federal Fillable Tax Forms directory, which provides a centralized resource for form instructions, prior-year versions, and supporting schedules connected to IRS Form 706 and other estate administration filings.
