Instructions for Form 706 (2023) Checklist
Form 706 is the Estate Tax Return used to report a decedent’s estate, calculate federal estate tax, and compute generation-skipping transfer tax when a transfer tax applies. It also supports elections such as the portability election for a surviving spouse and other required tax computations tied to the gross estate.
This checklist applies to 2023 deaths and follows IRS forms and filing requirements for Form
706 rather than income tax reporting. Items like Form 1040, Form 1041, direct deposit changes, or unemployment exclusions are separate and should not be mixed into estate tax forms.
Confirm Filing Trigger and Correct Return Type
Form 706 generally applies when a United States estate exceeds the filing threshold after combining gross estate values with adjusted taxable gifts, then comparing totals to the year’s federal estate tax rules. Filing may also be required to preserve portability election treatment, even if the estate tax due is not expected.
If the decedent was not a U.S. citizen and not a U.S. resident at death, the estate generally uses Form 706-NA instead of Form 706. That classification affects the estate tax due analysis for non-resident aliens and can change which estate tax forms and schedules are appropriate.
Preparation Notes for Records, Tools, and IRS Access
The personal representative should gather trust documents, a certified copy of the will (when available), and valuation support before completing a PDF file or a PDF format package. Prior
IRS forms, including gift tax history and related elections, should be organized early to avoid errors in transfer tax reporting.
When using IRS Forms online, downloading with Adobe Acrobat Reader can reduce formatting issues, but a site may block some pages due to the owner's security solution. If a Cloudflare
Ray ID appears with online attacks language, SQL command warnings, or malformed data prompts, the return should be completed offline.
Ten-Step Checklist
Step 1: Verify identity and authority
The personal representative should confirm the decedent’s estate details, including the form number, date of death, and identifying information needed for IRS processing. Authority documents should be retained with the return package, along with any Estate Tax Power of
Attorney, when a representative contacts the Internal Revenue Service.
Filing requirements should be evaluated by confirming whether the filing threshold test is met and whether the return is filed solely to make a portability election. If an extension is anticipated, the application for extension should be prepared early to reduce last-minute errors.
Step 2: Confirm the correct return and state coordination
The filer should confirm that Form 706 is the correct estate tax return and that Form 706-NA is not required based on domicile and citizenship. This classification drives which federal estate tax rules apply and whether special non-resident alien concepts should be considered.
State filings should be treated as separate, including New York State items that may involve distinct estate tax forms such as Form M-706 or related state submissions. Any estate tax domicile questions should be addressed before filing to prevent delays or mismatches in jurisdictional records.
Step 3: Build the gross estate inventory
The gross estate inventory should include real estate, securities, cash accounts, insurance, and trust interests, even when assets bypass probate through beneficiary designations. Each item should be described clearly to support later tax computations and avoid missing includible property.
Fair market value should be documented as of the valuation date required by the Instructions for
Form 706, with appraisals or statements retained in the file. A clear inventory supports estate tax due reconciliation and reduces disputes during IRS review.
Step 4: Decide on elections before final valuations
Elections that affect reporting should be considered before schedules are finalized, including portability elections and any valuation-related elections permitted by the instructions. Elections often affect multiple schedules and should be applied consistently across the return.
If portability is the primary purpose, the return should still include defensible values and clear reporting for the gross estate. The return should be assembled so the Internal Revenue Service can trace elections and supporting documentation without guesswork.
Step 5: Complete Schedules A through C correctly
Schedule A should report real estate interests with identifying details and value support, ensuring the correct ownership percentage and includible portion are shown. Schedule B should list stocks and bonds with consistent valuation documentation and clear issuer identification.
Schedule C should report mortgages, notes receivable, and cash accounts with statements close to the date of death for support. Clear schedule placement reduces processing questions and supports later requests for an estate tax closing letter.
Step 6: Complete Schedules D through F with proper placement
Schedule D should report insurance on the decedent’s life when includible, supported by policy documentation and beneficiary details retained in the file. Transfers involving policy rights should be analyzed under applicable transfer tax rules when facts indicate a recent change.
Schedule E should report jointly owned property using contribution records to accurately determine the includible portion. Schedule F should capture tangible personal property and other miscellaneous assets not reported elsewhere, keeping descriptions consistent with valuation support.
Step 7: Report lifetime transfers and powers on the correct schedules
Schedule G should be used for includible lifetime transfers described by the instructions, rather than a general list of recent gifts. Gifts that belong on Form 709 should be treated as gift tax history support, not as a substitute for estate schedule reporting.
Schedule H should report property subject to a general power of appointment when inclusion applies, supported by trust documents and governing language. Correct placement prevents rework and reduces IRS correspondence tied to misclassified inclusion items.
Step 8: Report annuities and administration expenses correctly
Schedule I should be used for annuities and similar contract rights included in the gross estate under the Form 706 instructions. Supporting statements should be retained so values can be traced through the return without conflicting documentation.
Schedule J should be used for funeral expenses and administration costs associated with property subject to claims, with invoices and payment support retained. Coordination with fiduciary filings helps avoid duplicating deductions and improves consistency across estate tax forms.
Step 9: Assemble attachments and prepare for IRS verification
Attachments should be organized so each schedule can be verified quickly, including appraisal reports, trust documents, and a certified copy of the will when required. If the filer anticipates
IRS follow-up, supporting files should be kept in a single, organized package.
For verification and status tracking, Form 4506-T may be used later to request an account transcript when appropriate for administrative needs. If an IRS transfer certificate is needed, the record set should be complete to reduce service processing time.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: File, pay, and resolve post-filing actions
If tax due exists, payment steps should follow the return instructions, including timely submission and documentation of any deferred payment or tentative payment approach permitted. If an extension is needed, Form 4768 should be filed on time, understanding that an extension to file may not extend the time to pay.
After filing, post-processing items may include requesting an estate tax closing letter or a tax closing letter, as needed, for administration and third-party confirmations. If an estate tax lien issue arises, an application for release or release of lien release request may be required, and a claim for refund may apply if later corrections change liability.
Final Review Checks
The return should be reviewed for correct schedule placement, consistent totals, and complete attachments, with special attention to portability election entries and cross-references. File assembly should be stable and readable, especially when prepared as a PDF file for printing or mailing.
If processing issues occur, details such as tracking ID notes, TC 421 references, or a refund verification letter or a verification letter may appear during follow-up. Those items should be handled as administrative workflow steps, not as reasons to alter the filed tax computations without support.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
