Do You Need to File an Estate Tax Return? (Form 706)

Form 706 — the United States Estate (and Generation-Skipping Transfer) Tax Return — is filed to report the federal estate tax. Most estates never need to file it. But for those that do, the stakes are high and professional guidance is essential. This guide explains when Form 706 is required and what the filing involves.

Who Must File Form 706

Form 706 must be filed if the gross estate plus any adjusted taxable gifts made during the deceased's lifetime exceeds the federal estate tax exemption:

For deaths in 2024: the exemption is $13.61 million per individual
For deaths in 2025: the exemption is approximately $13.99 million (adjusted annually for inflation)

The gross estate includes essentially everything the deceased owned or had an interest in at death: bank accounts, investments, real estate, retirement accounts, life insurance (if the deceased owned the policy), business interests, personal property, and even certain assets the deceased gave away but retained interests in.

The 2026 sunset

The current high exemption is scheduled to sunset (automatically reduce by approximately half) after December 31, 2025, reverting to roughly $7 million (adjusted for inflation since 2017) unless Congress takes action. This is a significant issue for estates planning around 2026 and beyond.

Filing Form 706 for Portability (Even for Non-Taxable Estates)

Even if no estate tax is owed, there is an important reason to file Form 706: to preserve the deceased spouse's unused exemption for the surviving spouse through "portability."

Portability allows a surviving spouse to add the deceased spouse's unused exemption amount (the "Deceased Spouse's Unused Exclusion Amount" or DSUE) to their own exemption. Without filing Form 706 to elect portability, this unused exemption is lost.

Example: Spouse 1 dies in 2024 with a $3 million estate. Their exemption is $13.61 million. The unused exemption is $10.61 million. If Spouse 2 timely files Form 706 to elect portability, Spouse 2 can add $10.61 million to their own exemption — potentially sheltering over $24 million from estate tax.

Portability election requires timely filing of Form 706 — typically within 9 months of death (or up to 15 months with an extension). However, there is a simplified late-filing procedure allowing estates to make a late portability election up to 5 years after the date of death — check IRS Revenue Procedure 2022-32 for details.

Filing Deadline

Original Form 706 due date: 9 months after the date of death
Extension available: An additional 6 months (to 15 months total) can be granted by filing Form 4768 by the original due date

Important: The extension to file does NOT extend the time to pay any estate tax owed. Interest accrues on unpaid estate tax from the original due date. An installment payment option exists for estate taxes attributable to closely held business interests (IRC Section 6166).

What Form 706 Covers

Form 706 is comprehensive — over 40 pages with numerous schedules:

Schedule A: Real estate
Schedule B: Stocks and bonds
Schedule C: Mortgages, notes, and cash
Schedule D: Life insurance
Schedule E: Jointly owned property
Schedule F: Other miscellaneous property
Schedule G: Transfers during the decedent's life (gifts and certain transfers)
Schedule H: Powers of appointment
Schedule I: Annuities
Schedule J: Funeral and administration expenses (deductions)
Schedule K: Debts of the decedent (deductions)
Schedule L: Net losses during administration (deductions)
Schedule M: Marital deduction
Schedule O: Charitable deductions
Schedule R: Generation-skipping transfer tax

State Estate Tax Returns

In states with their own estate tax (see our article on estate tax vs. inheritance tax), separate state estate tax returns may be required. State forms and deadlines vary. Many states that have estate taxes use the federal Form 706 as the basis but have their own filing and payment requirements.

Do You Need a Tax Attorney or CPA?

For estates that may owe estate tax: yes, unequivocally. Estate tax minimization and optimization involves complex valuation issues, deduction planning, and election decisions. The stakes justify professional fees.

For estates that don't owe tax but want to file for portability: a CPA experienced in estate matters can typically handle this more affordably.

For the complete taxes after death guide, see our taxes after a death guide. For the difference between estate and inheritance tax, see our article on estate tax vs. inheritance tax.