What IRS Form 706 (2025) Is For

IRS Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return used to calculate and report federal estate taxes owed when someone dies. Executors must file this form if the deceased person's gross estate (plus adjusted taxable gifts) exceeds $13.99 million, or if they want to elect "portability" - transferring any unused estate tax exemption to a surviving spouse, regardless of estate size (IRS Instructions for Form 706, Rev. September 2025).

When You'd Use Form 706 for 2025 (Late or Amended Filing)

You might be filing Form 706 late or as an amended return in several situations: receiving IRS notices about unfiled estate tax returns from prior years, discovering you missed the portability election deadline and need to request relief under Rev. Proc. 2022-32 (allowing filing up to 5 years after death), finding errors in a previously filed return that affect the tax owed, or needing to correct asset valuations or missed deductions.

Late filers may also be responding to IRS audit adjustments or balance due notices, while amended filers typically discover omitted assets, incorrect valuations, or missed elections after the original filing.

Key Rules Specific to 2025

For deaths occurring in 2025, the filing threshold increased to $13.99 million (from $13.61 million in 2024), with a corresponding basic credit amount of $5,541,800.

The Form 706 and all schedules have been redesigned and separated for improved efficiency - all schedules must now be completed and attached separately rather than being part of the main form.

New direct deposit fields (lines 23b-23d) allow electronic refund deposits, and the estate tax closing letter fee was reduced to $56 from $67 for requests received after May 21, 2025 (IRS Instructions for Form 706, Rev. September 2025).

Step-by-Step (High Level)

• Gather transcripts and records: Obtain estate tax account transcripts from the IRS, death certificates, copies of previously filed returns, and complete asset documentation
  
  
• Complete the correct-year form: Use the 2025 revision of Form 706 for deaths in 2025, ensuring all schedules reflect current-year requirements and thresholds
  
  
• Attach required schedules: Include all applicable schedules (A through U, R-1) with proper supporting documentation, appraisals, and exhibits clearly marked
  
  
• Choose filing method: Mail paper returns to the Cincinnati Service Center or check current IRS guidance for any electronic filing options for estate returns
  
  
• Keep complete copies: Maintain copies of the entire filing package, including all attachments, supporting documents, and proof of mailing for your records
  
  

Common Mistakes and How to Avoid Them

• Missing portability election deadlines: File Form 706 within 15 months (including extensions) for timely portability election, or request relief under Rev. Proc. 2022-32 within 5 years of death
  
  
• Incomplete asset valuations: Obtain professional appraisals for all non-cash assets and ensure "adequate disclosure" to start the 3-year statute of limitations for IRS review
  
  
• Omitting prior taxable gifts: Include all lifetime taxable gifts made by the decedent on the Taxable Gifts Reconciliation worksheet to properly calculate available exemption
  
  
• Incorrect schedule attachments: Each asset type requires specific schedules (real estate on Schedule A, stocks on Schedule B, etc.) with detailed descriptions and proper supporting documentation
  
  
• Failing to elect special valuations: Consider Section 2032A special-use valuation for qualifying farm/business property or alternate valuation dates when beneficial
  
  
• Not signing properly: Only the appointed executor can sign Form 706; co-executors must attach a statement explaining who is authorized to act
  
  

What Happens After You File

The IRS typically takes 6-12 months to process estate tax returns, though complex returns or those requiring additional review may take longer.

You'll receive either an acceptance letter or a notice requesting additional information, corrections, or proposing changes. If you disagree with IRS adjustments, you have appeal rights through the Independent Office of Appeals before the case goes to Tax Court.

Payment plans are available through Form 9465 if you cannot pay the full amount owed, and interest accrues on unpaid balances from the original due date.

For refund claims, you generally have 3 years from the filing date or 2 years from when tax was paid to file for refunds, whichever is later (IRS Publication 559).

FAQs

Can I still elect portability if I missed the original deadline?

Yes, if the estate wasn't otherwise required to file Form 706, Rev. Proc. 2022-32 allows portability elections up to 5 years after death. Beyond that, you can request relief under Reg. Section 301.9100-3.

What penalties apply for late filing of Form 706?

Late filing penalty is 5% of tax owed per month (up to 25% maximum), plus late payment penalties and interest from the original due date. Penalties may be waived for "reasonable cause" - request relief after receiving penalty notices (IRS Instructions for Form 706).

How do I get estate tax account transcripts for late filing?

Call the IRS Practitioner Priority Service at 866-860-4259 or submit Form 4506-T specifically requesting estate tax transcripts. Include the decedent's name, date of death, and EIN.

What's the statute of limitations for amending Form 706?

Generally 3 years from the original filing date to claim refunds, but the IRS has 3 years to assess additional taxes (longer if there's substantial underreporting of assets). Filing an amended return extends the IRS assessment period by 60 days.

Should I amend state estate tax returns too?

Review your state's requirements - many states accept federal Form 706 but have different exemption amounts. Some states require separate returns or have independent filing requirements not tied to federal thresholds.

Can I file Form 706 electronically for late or amended returns?

Currently, Form 706 must be filed on paper. Mail to the Cincinnati Service Center with proper postmark documentation. Electronic filing is not available for estate tax returns as of 2025.

What if I can't pay the estate tax owed?

Request an installment agreement using Form 9465, consider Section 6166 installment payments for qualifying business interests (up to 10 years for the first $1.9 million), or explore other payment alternatives before the IRS initiates collection actions (IRS Instructions for Form 706).

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