What Form 706 (2022) Is For
IRS Form 706 (2022), officially known as the United States Estate (and Generation-Skipping Transfer) Tax Return, is used by executors to calculate and report federal estate taxes after a person’s death. It determines the value of the decedent’s gross estate, applies deductions and credits, and reports any generation-skipping transfers.
For individuals who died in 2022, the executor must file Form 706 if the gross estate plus adjusted taxable gifts exceeds $12,060,000. The form is also required to elect portability, which allows a surviving spouse to use any unused portion of the deceased spouse’s exclusion amount. Even if no estate tax is owed, the form may still be filed to preserve this benefit for a married couple.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive IRS Form 706 (2022): Late & Amended Filing Guide.
When You’d Use Form 706 (2022)
Executors or personal representatives must file Form 706 within nine months of the decedent’s death. A six-month filing extension may be requested by submitting Form 4768 before the due date.
Common Scenarios for Filing
- The value of the estate exceeds the federal exemption limit for 2022.
- The executor wishes to elect portability to transfer the unused exclusion to a surviving spouse.
- A previously filed return requires amendment or correction.
- The IRS requests additional information or an audit response.
When filing late, penalties and interest generally apply. However, under Revenue Procedure 2022-32, executors may file up to five years after death solely to make the portability election. This update provides significant relief for estates that missed the initial deadline.
Key Rules or Details for 2022
Critical thresholds and figures for 2022 include:
- The basic exclusion amount is $12,060,000.
- The unified credit amount is $4,769,800.
- The special-use valuation ceiling is $1,230,000.
- The threshold for 2% interest installment payments is $ 1.64 million.
These limits determine whether the estate is subject to estate tax, qualifies for installment payments, or can utilize special valuation rules for certain types of property. Executors must include all property owned at death, such as real estate, business interests, and bank accounts.
Form 706 also reports generation-skipping transfers and direct skips when applicable. These apply to gifts or transfers made to beneficiaries who are two or more generations below the decedent, such as grandchildren. Executors should review any prior gift tax returns (Form 709) to ensure consistency and accuracy for gift tax purposes.
For more resources on filing or understanding prior-year IRS forms, visit our guide on Estate, Gift, and Trust Forms.
Step-by-Step (High Level)
Steps to Complete Form 706 (2022)
- Gather all required documents: Include the death certificate, property appraisals, bank statements, investment account summaries, prior gift tax returns, and proof of executor authority.
- Use the correct revision of Form 706: The September 2022 version must be used, as later revisions are not valid for deaths in 2022.
- Complete all relevant schedules: These include Schedule A for real estate, Schedule B for stocks and bonds, and Schedule I for generation-skipping transfers.
- Attach supporting documentation: This includes Form 712 for life insurance, trust agreements, and valuation reports.
- Mail the completed return: Send it to the IRS Estate Tax Processing Center in Kansas City, Missouri. For amended returns, use the Florence, Kentucky, address and mark “Supplemental Information” on page 1.
- Pay any balance due: Payments may be made by direct debit, check, or money order. Estates unable to pay in full may request an installment agreement using Form 9465.
- Retain complete copies: Keep copies of the filed return and supporting records securely and track delivery confirmation for proof of filing.
Common Mistakes and How to Avoid Them
- Using an outdated Form 706: Always use the correct version (Rev. September 2022) to comply with current requirements.
- Omitting reportable assets: Include all property, including digital assets, foreign accounts, and jointly owned items.
- Inconsistent valuations: Match estate values with those used for income tax purposes when beneficiaries sell assets.
- Incorrect portability filings: Clearly note “Filed pursuant to Revenue Procedure 2022-32” on the first page for portability elections.
- Mailing to the wrong IRS center: Send returns to the correct processing address for estate filings.
- Handling complex estates without expert help: Consult a tax professional or estate attorney for estates involving trusts or multiple beneficiaries.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once the IRS receives Form 706, processing generally takes several months. The IRS may send correspondence requesting additional information, clarification about valuations, or confirmation of deductions. Interest continues to accrue on any unpaid tax until payment is complete.
Executors can request an estate tax closing letter about nine months after filing through Pay.gov for a $67 fee. This letter confirms that the IRS has completed its review of the return. If adjustments are made, the IRS will issue a notice explaining any changes and additional amounts owed.
If an executor disagrees with an IRS determination, an appeal can be filed with the IRS Office of Appeals. Maintaining organized records, proof of mailing, and payment confirmations is essential for resolving potential disputes.
FAQs
What is IRS Form 706 (2022) used for?
IRS Form 706 (2022) is used to file an estate tax return for a deceased person’s estate. It reports the value of property, assets, and transfers, including gifts made for gift tax purposes and generation-skipping transfers.
Who must file an estate tax return for 2022?
An executor must file an estate tax return when the gross estate and adjusted taxable gifts exceed the federal exclusion amount. Estates may also file to elect portability for a surviving spouse, helping them qualify for future estate tax benefits.
How can an executor pay estate taxes owed to the IRS?
Estate taxes may be paid through direct debit, check, or electronic funds transfer from a bank account. These payment options enable executors to make secure payments for outstanding balances using verified IRS payment services.
What happens if an estate files Form 706 late?
If the executor files Form 706 after the due date, interest and penalties may apply. The IRS considers reasonable cause exceptions, especially when additional information or documents are needed to complete the filing accurately and protect the estate’s rights.
Can an estate use installment payments for business or property taxes?
Yes, estates with closely held businesses or significant property value may request installment payments under Section 6166 of the Internal Revenue Code. This rule helps pay estate taxes over time, preserving assets, funds, and business operations for beneficiaries and trustees.
How are generation-skipping transfers and direct skips reported?
Generation-skipping transfers and direct skips must be reported on Form 706. These transactions involve property or money transferred to beneficiaries two or more generations below the deceased person, and they are subject to special tax reporting rules and exceptions.
Should a married couple file Form 706 together?
No, Form 706 is filed only by the executor of the deceased spouse’s estate. A married couple does not file jointly, but the surviving spouse may benefit through the portability election of the unused exclusion amount.
