How to File Federal Form 706 for Tax Year 2024

Thousands of executors and administrators face the daunting task of settling a deceased person’s estate each year. According to the IRS, only a small percentage of estates owe federal estate tax, but many more must still file federal Form 706 for tax year 2024. Most families assume filing is unnecessary with the estate tax exemption of $13,610,000. Yet even estates well below this threshold may still need to file itoelect portability for a surviving spouse, preserve tax benefits, or ensure compliance with federal tax laws.

Filing Form 706 is not just about filling in numbers. It is a legally binding document that establishes the value of the decedent’s assets, applies deductions such as funeral expenses and debts, and calculates the estate’s total tax liability. More importantly, errors can carry real financial consequences. Missing the nine-month deadline after the decedent’s death may result in penalties of up to 25 percent of the estate taxes owed. Failing to include all required schedules or overlooking adjusted taxable gifts can delay the issuance of the estate tax closing letter, a document many executors need before distributing assets to beneficiaries.

This comprehensive guide will clarify how to file Form 706 in 2024, whether the estate includes real estate, personal property, bank accounts, or business interests. We will walk through every step of the process: from gathering necessary documentation and valuing the estate’s assets to applying deductions and completing the final filing requirements. Along the way, we will highlight common mistakes, explain special elections like portability, and share strategies to save time and stress. 

Understanding Federal Form 706 for Tax Year 2024

Federal Form 706 for 2024 is the United States Estate (and Generation-Skipping Transfer) Tax Return. This tax form serves two primary purposes: reporting the decedent’s assets' total value, determining whether estate tax is imposed, and electing portability of any unused federal estate tax exemption for the surviving spouse. The return covers the gross estate, adjusted taxable gifts made during life, and applicable deductions such as funeral expenses, debts, or charitable transfers.

The form is required under the Internal Revenue Code and ensures compliance with federal tax laws. Even when an estate does not owe taxes, Form 706 may still be necessary to preserve the deceased spousal unused exclusion (DSUE), which allows a surviving spouse to carry forward any unused exemption. Therefore, filing this form correctly is essential for estates above the threshold and those planning for future tax liabilities.

Who Must File Form 706?

Executors and personal representatives must file Form 706 if the decedent’s gross estate, plus adjusted taxable gifts and certain exemptions, exceeds the federal estate tax exemption of $13,610,000 for 2024. The filing requirement applies to all estates of U.S. citizens and residents, regardless of where their assets are located. Estates below this threshold are not required to file unless the executor wishes to make the portability election for a surviving spouse.

It is important to note that filing obligations may also extend to the estates of nonresident aliens with U.S. property interests. In these cases, filing requirements differ, and professional guidance is highly recommended. Executors should also understand that failing to file on time can result in penalties, delayed processing, and even difficulties obtaining the estate tax closing letter from the IRS.

Key Updates and Thresholds in 2024

For 2024, the IRS has adjusted several critical figures determining whether a decedent’s estate is subject to federal estate tax. The federal estate tax exemption has increased to $13,610,000, up from $12,920,000 in 2023. Only estates with a total value above this amount will face estate tax liability. Along with this increase, the basic credit amount now stands at $5,389,800, while the ceiling for special-use valuation on qualifying farm or business property is $1,390,000. The annual gift tax exclusion has also risen to $18,000 per recipient.

These numbers may seem abstract, but they have real consequences. Executors must calculate the decedent’s gross estate, apply all allowable deductions, and compare the result against the current exemption amount. Even if no estate tax is ultimately imposed, accurate reporting is essential to ensure compliance with federal tax laws and avoid delays in processing the estate tax return.

Comparison Table 1: Estate Tax Thresholds (2023 vs 2024)

Federal Estate Tax Exemption

• 2023: $12,920,000
• 2024: $13,610,000

Basic Credit Amount

• 2023: $5,123,800
• 2024: $5,389,800

Special-Use Valuation Ceiling

• 2023: $1,310,000
• 2024: $1,390,000

Annual Gift Tax Exclusion

• 2023: $17,000
• 2024: $18,000

What Changed in 2024?

The most significant update is the higher estate tax exemption amount, which will reduce the number of estates subject to tax. However, filing requirements remain strict for executors who wish to make the portability election. The IRS has also extended relief for portability-only filings: under Rev. Proc. 2022-32, executors may file up to five years after the decedent’s death. Additionally, simplified reporting rules allow certain marital or charitable deduction property estimates when filing solely for portability.

Preparing to File Form 706

Filing federal Form 706 for tax year 2024 is not a process that can be done overnight. Before completing the return, executors and personal representatives must gather documents, value the estate’s assets, and take steps to ensure compliance. Preparation is crucial to avoid delays, penalties, or rejected filings.

Step 1 – Gather Necessary Documentation

The first step in preparing the estate tax return is to create a complete file of all legal and financial records. Executors should assemble:

1. Certified death certificate and will: These establish executor authority and confirm the decedent’s death. Courts may also require letters of administration for estates without a will. These documents are essential attachments for the IRS.
   
   
2. Bank accounts and investment records: Include checking, savings, brokerage statements, and retirement accounts. Executors must report balances as of the date of death. Missing account details can result in processing delays.
   
   
3. Insurance policies and trust documents: Form 712 is required for each life insurance policy, and all trust agreements where the decedent had an interest must be attached. These help determine if assets are includable in the gross estate.
   
   
4. Business and property records: Deeds, business valuations, and partnership agreements ensure the estate includes accurate values for closely held companies and real property. Appraisals must meet IRS standards for fair market value.
   
   
5. Prior tax returns: Copies of gift tax returns (Form 709) and estate income tax return filings (Form 1041) may be necessary to reconcile lifetime transfers with the estate’s assets.

Step 2 – Obtain Valuations for the Estate’s Assets

The IRS requires that all assets be valued at fair market value on the date of death. Executors must:

• Obtain professional appraisals for real estate, closely held businesses, and personal property worth more than $3,000. These valuations must be included with the filing.
  
  
• List publicly traded securities at the closing price on the date of death, or the nearest trading day if the markets were closed.
  
  
• Document personal property such as vehicles, jewelry, and collectibles. Undervaluing or omitting items may result in IRS challenges and additional tax imposed later.

Proper valuation is one of the most critical steps in ensuring compliance and protecting beneficiaries from disputes or penalties.

Step 3 – Apply for an Estate EIN and Notify the IRS

Executors must apply for an Employer Identification Number (EIN) for the estate using Form SS-4. This number is required to open an estate bank account, manage the estate’s income, and file the estate income tax return if needed. Additionally:

• File Form 56 to notify the IRS that you are the fiduciary responsible for managing the estate.
  
  
• Establish a dedicated estate bank account to handle all transactions. This ensures estate administration remains transparent and traceable.
  
  
• Keep records of income generated after death, such as rent or dividends, since this may require filing separate income tax returns for the estate.

Completing Federal Form 706 for Tax Year 2024

Completing federal Form 706 for tax year 2024 is an intricate process. Each part of the return requires careful attention to detail, since errors may lead to IRS delays, rejected filings, or unexpected estate taxes owed. Executors should proceed systematically, addressing each schedule in order and confirming that all supporting documentation is attached.

Calculating the Gross Estate

The gross estate represents the total value of the decedent’s assets at fair market value on the date of death. Executors must complete multiple schedules to ensure all property is accurately reported.

• Real Estate (Schedule A): Executors must list all real estate holdings, including the primary residence, vacation property, and rental homes. Appraisals must be attached, showing fair market value. If the estate includes a family farm or qualifying business property, consider the special-use valuation election under Section 2032A, which may reduce the taxable estate by up to $1,390,000 in 2024.
• Stocks, Bonds, and Bank Accounts (Schedules B & C): Executors should report the value of all publicly traded stocks, bonds, mutual funds, and other investments. CUSIP numbers and closing prices on the date of death are required. Bank accounts, CDs, and money market accounts must also be included with balances verified by date-of-death statements. Missing or incomplete account details often result in IRS processing delays.
• Life Insurance and Jointly Owned Property (Schedules D & E): Schedule D requires reporting all life insurance proceeds payable to the estate or where the decedent retained ownership rights. Form 712 is mandatory for each policy. Schedule E covers jointly owned property: executors must determine the decedent’s share, which depends on ownership type and contributions. Special rules apply for property owned jointly with a surviving spouse.
• Miscellaneous Assets and Transfers (Schedules F & G): Schedule F is mandatory for all estates and covers personal property, household goods, digital assets, and retirement accounts. Schedule G reports certain transfers during the decedent’s life, including gifts made within three years of death, revocable trusts, and retained life estates. Executors should verify that all adjusted taxable gifts match prior gift tax returns.

Applying Deductions to Reduce the Taxable Estate

After calculating the gross estate, executors must apply allowable deductions. These reduce the taxable estate and ultimately determine whether estate taxes are imposed.

• Funeral Expenses and Administration Costs (Schedule J): The estate may deduct funeral expenses, attorney fees, accountant costs, executor commissions, and court fees. Executors must maintain receipts and detailed records of all expenses.
• Debts and Mortgages (Schedule K): Outstanding debts, including mortgages, medical bills, and business obligations, are deductible. Executors must provide documentation such as loan statements or final invoices.
• Losses During Administration (Schedule L): Casualty losses, theft, or investment losses during estate administration may be deducted. These deductions can reduce the estate’s total tax liability, but must be supported with clear documentation.
• Spousal and Charitable Deductions (Schedules M & O): Schedule M applies to bequests left outright to a surviving spouse or qualifying property transferred under a marital trust. Schedule O covers charitable bequests made to qualifying organizations.

Executors must attach supporting documentation such as trust agreements, deeds, or donation records.

Computing Estate Tax Liability

Once deductions are applied, the executor must compute the estate’s final tax liability.

1. Executors must add together all assets to determine the gross estate.
   
   
2. They must then subtract deductions for debts, expenses, and qualified transfers to calculate the taxable estate.
   
   
3. After this, they must add adjusted taxable gifts made during the decedent’s life.
   
   
4. The executor then applies the unified tax rate schedule to determine the tentative estate tax.
   
   
5. The executor subtracts credits from this amount, including the basic credit amount, gift taxes previously paid, and the foreign death tax credit, if applicable.
   
   
6. Once all adjustments are made, the estate’s total tax liability is determined.

How Deductions and Credits Affect Estate Taxes

Deductions

• Description: Funeral expenses, outstanding debts, spousal bequests, and charitable transfers
• Effect on Tax: Reduce the taxable estate before the estate tax is calculated

Credits

• Description: Foreign death tax credit, tax on prior transfers, and the unified credit
• Effect on Tax: Reduce the estate tax owed after the tax has been calculated

Executors must review all calculations carefully. Even minor errors, such as double-counting expenses, may result in incorrect amounts of estate taxes owed. A miscalculated taxable estate can delay the issuance of the estate tax closing letter and complicate estate administration.

Special Elections and Portability

Certain elections available under federal tax laws can significantly reduce the tax burden on a decedent’s estate or preserve valuable exemptions for a surviving spouse. Executors must review these options carefully before filing federal Form 706 for tax year 2024, since some elections are irrevocable once the return is submitted.

Portability of Deceased Spousal Unused Exclusion (DSUE)

One of the most essential features of Form 706 is the portability election. Portability allows a surviving spouse to use any portion of the deceased spouse’s federal estate tax exemption, which is not used at death. For 2024, the exemption is $13,610,000. If a decedent only used $5,000,000, the surviving spouse may add the remaining $8,610,000 to their own exemption, significantly reducing future estate tax liability.

Executors must file Form 706 within nine months of the decedent’s death (or with an extension) to elect portability. Failing to file can permanently forfeit the DSUE even if no estate taxes are owed. The IRS also provides relief under Revenue Procedure 2022-32, allowing portability-only filings up to five years after death, provided a specific notation is included on the return.

Other Important Elections

• Alternate Valuation Date Election: Executors may value estate assets six months after death if this reduces the gross estate and estate taxes owed. This election applies to the entire estate and cannot be revoked once made.
• Special-Use Valuation (Section 2032A): For estates including farms or closely held businesses, special-use valuation allows qualifying property to be valued based on its actual use rather than fair market value. This election can reduce the taxable estate by up to $1,390,000 in 2024. However, the property must remain in the family and be used in the same business or agricultural capacity for at least 10 years.
• Installment Payments (Section 6166): Estates where a closely held business makes up more than 35 percent of the gross estate may elect to pay estate taxes in installments over 14 years. The first four years are interest-only, with reduced interest rates applying to the first $1,850,000 tax.

Filing Requirements and Deadlines

Filing federal Form 706 for tax year 2024 requires strict compliance with IRS rules. Executors who fail to follow instructions risk delays, penalties, or rejection of the estate tax return. Understanding how and where to file and observing the nine-month deadline is essential for proper estate administration.

Where and How to File Federal Form 706

Form 706 cannot be filed electronically; it must be mailed as a paper return. Executors should assemble the form, schedules, and required attachments in proper order. The death certificate and any required appraisals must be attached. The executor must sign the return, and if a paid preparer is used, their signature and PTIN must also be included.

The return should be mailed to the following address if using the United States Postal Service:

‍

Department of the Treasury  

Internal Revenue Service  

Kansas City, MO 64999  

‍

For private delivery services such as FedEx or UPS, send the completed return to:

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Internal Revenue Submission Processing Center  

333 W. Pershing Road  

Kansas City, MO 64108  

Key Deadlines Executors Must Remember

• Nine-month deadline: Executors must file Form 706 within nine months of the decedent’s death. Missing this deadline may result in penalties of up to 25 percent of the estate taxes owed.
  
  
• Six-month extension: Filing Form 4768 before the nine-month deadline provides an automatic six-month extension for filing. However, the extension only applies to filing, not payment.
  
  
• Payment requirement: Estate taxes remain due within nine months regardless of any filing extension. Interest will accrue on unpaid balances even if an extension is granted.

Key takeaway: Executors should mark deadlines carefully and, if needed, request extensions early to ensure compliance. Filing late may increase the estate’s total tax liability and delay the issuance of the estate tax closing letter.

Payment of Estate Taxes

Paying the correct estate tax on time is as important as filing the return. The IRS requires payment of all estate taxes within nine months of the decedent’s death, regardless of whether an extension has been requested for the estate tax return. Executors must plan carefully to ensure the estate generates enough liquidity to meet payment obligations.

Accepted Payment Methods

• Check payments: Executors may send checks payable to the “United States Treasury.” Each check must include the decedent’s name, Social Security number, and “Form 706.” The IRS does not accept a single check greater than $100 million.
  
  
• Electronic Federal Tax Payment System (EFTPS): This free, government-operated payment platform requires prior enrollment. Executors must schedule payments by 8 PM Eastern Time the day before the deadline. Payments can be made online or by phone at 800-555-4477.
  
  
• Same-day wire transfers: Executors may arrange a same-day wire through the estate’s bank. This option avoids EFTPS enrollment but may involve bank service fees. Transactions must be completed before the bank’s cutoff, typically 5 PM Eastern Time.

Installment Payments for Large Estates

For some estates, immediate full payment may create significant financial strain. The Internal Revenue Code allows installment options to ease the burden.

• Section 6166 installment election: Estates where a closely held business comprises more than 35 percent of the gross estate may pay taxes over up to 14 years. The first four years are limited to interest-only payments. Reduced interest rates apply to the first $1,850,000 of estate tax.
  
  
• Section 6163 election: If the estate includes reversionary or remainder interests, executors may defer payment until the beneficiary receives the property. This election is less common but can provide relief in specific circumstances.

Executors should review all payment options early in the process. Proper planning avoids late-payment penalties, interest charges, and unnecessary hardship for beneficiaries.

Avoiding Common Mistakes

Even carefully prepared estate tax returns are sometimes delayed or rejected due to avoidable mistakes. Executors should take extra care to review all parts of federal Form 706 for tax year 2024 before mailing it to the IRS. Oversights may increase the estate’s total tax liability, trigger penalties, or stall the estate tax closing letter issuance.

Frequent Errors That Delay Processing

• Missing documents: Many returns are delayed because executors forget to attach required items such as the certified death certificate, Form 712 for life insurance policies, or professional real and personal property appraisals. Missing these attachments often results in IRS requests for additional information.
  
  
• Incorrect valuations: Executors sometimes rely on outdated appraisals instead of fair market value as of the decedent’s death. Inaccurate reporting of securities, closely held businesses, or household goods can increase the tax imposed and create disputes with beneficiaries.
  
  
• Miscalculations of the taxable estate: Errors in adding adjusted taxable gifts, double-counting deductions, or failing to apply the unified credit correctly may cause the estate to overpay or underpay estate taxes owed. These mistakes can delay the processing of the estate tax return.
  
  
• Failure to elect portability: Even estates below the exemption amount should consider filing to preserve the deceased spousal unused exclusion. Neglecting to elect portability can cost the surviving spouse millions in lost estate tax exemption.

Executors should review each schedule carefully, check calculations twice, and ensure that every required attachment is included. A second review by a tax professional may prevent costly mistakes and help ensure compliance with federal tax laws.

Practical Tips for Executors

Executors often find the estate administration process overwhelming. In addition to completing federal Form 706 for tax year 2024, they must coordinate with beneficiaries, track the estate’s income, and ensure every filing requirement is on time. Following best practices can help reduce stress and minimize costly errors.

Organizational Best Practices

• Maintain well-structured files: Executors should create separate folders for each schedule of Form 706. Keeping appraisals, bank account statements, and supporting documents in order makes it easier to prepare the return and respond to IRS inquiries.
  
  
• Track communications and expenses: Every decision, professional fee, and payment made on behalf of the decedent’s estate should be recorded. Detailed logs help when filing the estate income tax return and demonstrate transparency to beneficiaries.
  
  
• Document asset transfers: Executors should keep clear records of when the estate’s assets are distributed. This ensures compliance and protects against disputes or questions about missing property.

When to Seek Professional Guidance

• Complex estates: Executors should seek expert guidance when the estate includes closely held businesses, foreign assets, or generation-skipping transfer tax issues. These situations often require specialized knowledge of IRS regulations and valuation methods.
  
  
• High-value estates: Even estates under the exemption amount may benefit from professional review. A CPA or estate attorney can confirm whether the portability election should be made and ensure the estate tax return is error-free.
  
  
• Executors under pressure: When deadlines feel overwhelming, hiring professionals provides peace of mind and reduces the risk of penalties or delayed estate tax closing letters.

Executors do not have to manage every detail alone. Proper organization and professional support when needed can turn a daunting task into a manageable and compliant estate administration process.

Frequently Asked Questions (FAQs)

Do all estates need to file Form 706?

Not all estates are required to file federal Form 706 for the tax year 2024. Filing is mandatory only when the decedent’s gross estate plus adjusted taxable gifts exceeds the $13,610,000 exemption amount. However, many executors file even for smaller estates to elect portability, establish fair market values, or secure an official estate tax closing letter. Filing ensures compliance and may protect the surviving spouse from future estate tax liability.

What happens if I miss the nine-month deadline?

Penalties and interest may apply if the return is not filed within nine months of the decedent’s death. The IRS can impose a failure-to-file penalty of 5 percent per month, up to 25 percent of estate taxes owed. Interest accrues on unpaid balances regardless of extensions. Executors should still file as soon as possible to limit penalties. The IRS allows relief for up to five years for portability-only filings under Rev. Proc. 2022-32.

Can I deduct funeral expenses on Form 706?

Yes, funeral expenses are deductible when calculating the taxable estate. TDeductions may include burial costs, headstone expenses, and related services, provided they are documented with receipts. Executors must list these costs on Schedule J of the estate tax return. Claiming these deductions helps reduce the estate’s total tax liability, but to prevent double deductions, they cannot be deducted on the estate income tax return.

What is the estate tax closing letter, and when will I receive it?

The estate tax closing letter is an IRS-issued document confirming that the estate tax return has been reviewed and accepted. Executors typically receive it within four to six months of filing, though delays can occur if additional information is requested. While not always mandatory, many financial institutions and state probate courts require this letter before final distributions from the decedent’s estate can be completed.

How do I report adjusted taxable gifts?

Adjusted taxable gifts are reported by reconciling the decedent’s lifetime gift history with the gross estate. Executors must attach copies of prior gift tax returns (Forms 709) and list all applicable gifts on Schedule G of Form 706. These amounts are added to the taxable estate to prevent avoidance of estate tax through lifetime transfers. Proper reporting ensures the estate tax imposed is accurate and compliant with federal tax laws.