Form 706 (2020): U.S Estate & GST Tax Return
Checklist
This checklist explains how to prepare an estate tax return using IRS Form 706 for a decedent who was a U.S. citizen or resident and died in 2020. It reflects the federal estate tax framework in effect under the Tax Cuts and Jobs Act, including the increased exemption amount that applied during that period.
Form 706 is used to calculate the federal estate tax and, when applicable, the generation-skipping transfer tax on direct skips. It also supports elections affecting estate planning outcomes, including the marital deduction and portability for a deceased spouse.
Determine whether a Form 706 filing is required or
advisable
Form 706 applies when the decedent was a U.S. citizen or U.S. resident at death, while estates of nonresident noncitizens generally use Form 706-NA. Confirming status early ensures the correct estate tax return and avoids misapplication of IRS forms.
A filing is required if the gross estate, adjusted taxable gifts reported on Form 709, and other amounts needed exceed the federal estate tax exemption for 2020. A filing may also be recommended to preserve estate planning benefits, such as a portability election, even when no tax due is expected.
Confirm filing deadline and extension options.
The filing deadline for IRS Form 706 is generally nine months after the month of death. Timely filing is critical to preserve elections and limit penalties tied to the estate tax and GST tax.
If additional time is needed, Form 4768 may be filed to request an extension of time to file and, if applicable, pay. An extension to the filing does not eliminate tax liability, so the estimated federal estate tax should still be evaluated.
Complete the main body of IRS Form 706 first.
Part I identifies the decedent, estate executor, and basic estate information, including citizenship and residency status. Supporting documents, such as the death certificate and proof of executor authority, should be available during preparation.
Part II computes the tentative estate tax using the applicable tax rate and unified credit rules, while Part III records elections made by the executor. These elections may affect valuation, estate tax liability, and later wealth transfer outcomes.
Ten-Step Checklist for Completing Form 706 (2020)
Step 1: Identify and report real property and securities
Report all includible real estate on Schedule A and securities on Schedule B using fair market value as of the date of death, unless alternate valuation is elected. Clear descriptions and consistent valuation methods reduce processing delays.
Include documentation supporting ownership and valuation, especially for closely held assets.
Real estate appraisals and brokerage statements are commonly required.
Step 2: Report cash, insurance, and joint property
Use Schedule C to report cash and receivables, and Schedule D to report life insurance proceeds when includible under estate tax rules. Life insurance policy ownership and incidents of ownership should be reviewed carefully, and a Life Insurance Statement, such as Form 712, may be required.
Schedule E is used for jointly owned property and applies the correct inclusion rules based on the ownership structure. Proper reporting supports accurate calculation of the taxable estate.
Step 3: Report other property and valuation method
Schedule F captures property not reported elsewhere, including business interests, digital assets, and miscellaneous items. Each asset should be supported by records demonstrating its value and the transfer of property at death.
Fair market value is the default standard, and alternate valuation applies only if elected and permitted. Valuation consistency is essential for estate tax and income tax basis purposes.
Step 4: Report includible lifetime transfers
Schedule G is used to report certain lifetime transfers that are included in the gross estate under federal estate tax rules. This includes transfers involving retained interests or specific statutory inclusion provisions, rather than all gifts made within a particular period.
Prior Forms 709 should be reviewed to support the gift tax history. Accurate reporting ensures the correct application of the exemption amount and the computation of transfer tax.
Step 5: Report powers of appointment and annuities
Schedule H applies when the decedent held a general power of appointment causing estate inclusion. The schedule should describe the power and affected property without mixing in deduction items.
Schedule I is used to report annuity interests held at death. Retirement arrangements should be evaluated carefully to ensure proper placement under IRS Form 706 rules.
Step 6: Deduct expenses, debts, and losses
Schedule J reports funeral expenses and administration expenses related to property subject to claims, including certain medical expenses incurred during estate settlement. Supporting invoices and explanations should be retained.
Schedule K reports debts, mortgages, and liens existing at death, while Schedule L applies to qualifying losses and expenses related to property not subject to claims. Proper classification prevents overstated deductions.
Step 7: Claim the marital deduction and charitable transfers
Schedule M is used to claim the marital deduction for qualifying transfers to a surviving spouse, including QTIP trusts and other trust arrangements. Special rules apply when the surviving spouse is not a U.S. citizen.
Charitable transfers are reported on the appropriate charitable schedule for Form 706. Accurate reporting supports reducing estate tax liability and aligns with the estate plan.
Step 8: Report GST tax on direct skips
If death results in a generation-skipping transfer, complete the GST schedule required for direct skips, including Schedule R-1 when applicable. Reporting should follow section 2612 and related GST exemption rules.
Workpapers should identify skip persons, trust structures such as dynasty trusts, and any GST exemption allocation decisions. Clear documentation supports compliance with generation-skipping transfer tax return requirements.
Step 9: Perform a complete consistency and accuracy review
Confirm schedule totals reconcile with the recapitulation and tax computation sections. Adjusted taxable gifts, gift tax paid, and exemption usage should align with Form 709 history.
Attachments should be labeled and include identifying information. The estate executor must sign the return, and the preparer's information should be completed if a tax professional assisted.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Submit the Estate Tax Return properly
Use the “Where to file” instructions that correspond to the Form 706 revision applicable to 2020 deaths. Mailing addresses vary by delivery method, so confirm before submission.
Retain proof of filing and a complete copy of the signed return. Proper filing supports later requests, such as an estate tax closing letter, and reduces follow-up correspondence with the
Internal Revenue Service.
Notes and closing
This Form 706 checklist supports a practical filing process, but complex estates often involve technical rules that affect tax liability, GST exemption allocations, and portability decisions.
When dynasty trusts, QTIP trusts, retained annuity trusts, or other trust structures are involved, an estate attorney or tax professional may help confirm that elections and schedule reporting match the estate plan.
If a PDF file is used for preparation, tools like Adobe Acrobat can help locate each schedule by column heading and the search button, reducing skipped entries. After timely filing, the estate should retain the complete signed package and supporting workpapers, since follow-up questions and requests for an Estate Tax Closing Letter may take time and may depend on the service’s review cycle.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
