Form 706: The Federal Estate Tax Return, Explained for Executors

Who must file Form 706

Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return. It is a one-time return about what the person owned when they died. The executor signs and files it, and the estate pays any tax before the heirs receive their shares.

For a U.S. citizen or resident who died in 2026, a return is required when three amounts added together are more than the basic exclusion amount of $15,000,000:

• The gross estate, valued at the date of death. This is everything the person owned or controlled, including assets that skip probate: life insurance they owned, retirement accounts, jointly held property and living-trust assets.
• Adjusted taxable gifts, which are the taxable part of gifts made after 1976. These are gifts above the annual gift tax exclusion that should appear on the person's past Form 709 gift tax returns.
• Any specific exemption used on gifts made between September 9, 1976 and the end of 1976. Few estates have one.

Debts, the marital deduction and charitable gifts do not count toward the filing test. An estate can be required to file and still owe nothing, because everything above the threshold goes to a spouse or charity.

The "executor" is the person a court appointed: the executor named in the will, or an administrator. If no one was appointed, anyone in actual or constructive possession of the person's property is treated as the executor. That is often a successor trustee. Estates of people who were neither citizens nor residents file Form 706-NA instead. For the exemption itself and how it has changed, see our federal estate tax guide.

Why many smaller estates should still file: portability

Each person has their own $15 million exemption. When a married person dies and leaves most of their property to their spouse, little or none of that exemption gets used, because gifts to a U.S. citizen spouse are fully deductible. The unused part is called the deceased spousal unused exclusion (DSUE) amount.

Portability lets the surviving spouse add the DSUE amount to their own exemption. Together, a couple can shelter up to $30 million. But the transfer happens only if the executor elects it on a complete Form 706 filed on time, which means within 9 months of the death or by the extended deadline. The election is made simply by filing the return and computing the DSUE amount in Part 6; it cannot be undone once the deadline passes.

When filing for portability is worth it

The surviving spouse may never need the extra exemption. Executors and families still file because the spouse's own estate can grow over a long retirement, they may receive an inheritance, and exemption amounts are set by Congress and can change. The cost of filing is the cost of preparing the return. The cost of not filing is losing the DSUE amount for good.

Things to know before you elect

• Simplified valuation. An estate filing only to elect portability does not need exact values for property that qualifies for the marital or charitable deduction. Those assets still have to be estimated in good faith and included in the total.
• Last deceased spouse. The surviving spouse can use the DSUE amount only from their most recent deceased spouse.
• Not for GST. The generation-skipping transfer tax exemption is not portable.
• Keep the records. The IRS can look at how the DSUE amount was figured when the surviving spouse later uses it, so keep the valuations and statements with the spouse's papers.
• States are separate. Of the states with an estate tax, only Hawaii and Maryland allow portability of the state exemption, and each requires its own timely state return (Hawaii, Maryland).

Missed it? The 5-year late portability election

Estates that were not otherwise required to file can elect portability late, up to the fifth anniversary of the death, under Rev. Proc. 2022-32. This applies when the person was a citizen or resident, was survived by a spouse, and the estate was under the filing threshold, so a return was filed only to elect portability.

The return must be complete and properly prepared, and it must say at the top: "Filed Pursuant to Rev. Proc. 2022-32 to Elect Portability under section 2010(c)(5)(A)." No user fee applies to this late election.

After the fifth anniversary, or for an estate that was required to file and did not, the remaining route is a request for relief under Treasury Regulation 301.9100-3. That is a private letter ruling request, with an IRS fee, and it needs a tax professional.

The deadline, Form 4768, and paying the tax

Form 706 is due 9 months after the date of death (an automatic 6-month extension to file is available on Form 4768). Any estate tax is due at the 9-month mark as well. Form 4768 must be filed by the original due date to get the extension.

An extension of time to pay is a separate request on the same form. It generally runs up to 12 months at a time (up to 10 years in total for reasonable cause), and interest runs on any tax not paid by the original due date. An executor who expects tax to be owed should estimate it and pay as much as possible by the 9-month date. A separate set of rules (section 6166) can let an estate pay the tax on a closely held business in installments, when that business is more than 35% of the adjusted gross estate.

State deadlines can be shorter or longer than the federal one. Connecticut's return is due in 6 months, D.C.'s in 10 and Oregon's in 12. See the state table below.

What goes on the return, in plain words

Form 706 is long, but its logic is simple: list everything the person owned, subtract what the estate owes and what goes to a spouse or charity, add back lifetime taxable gifts, figure the tax, and subtract the credit for the exemption. Part 1 identifies the person and the executor, Part 2 computes the tax, Part 3 holds elections such as alternate valuation, Part 4 asks general questions (trusts, insurance, lifetime transfers), Part 5 summarizes, and Part 6 is the portability election.

Schedules A to I: what the person owned

Schedule T (formerly called Schedule A-1) is used to elect special-use valuation for a family farm or business property under section 2032A.

The deductions

State estate or inheritance taxes paid on property in the estate are also deductible, with no dollar limit. You can claim an anticipated amount before the state tax is paid, and the deduction must generally be claimed within 4 years after the return is filed. Other schedules cover the generation-skipping transfer tax (R and R-1), protective refund claims (PC) and conservation easements (U).

How the tax is figured

The taxable estate plus adjusted taxable gifts gives the base for a tentative tax at rates from 18% to 40%. Gift tax the person already paid is subtracted, then the applicable credit for the exemption ($15 million, plus any DSUE amount the person received from an earlier spouse). If the credit covers the tentative tax, nothing is owed.

Valuation date and alternate valuation

Assets are reported at fair market value on the date of death: what a willing buyer would pay a willing seller. For publicly traded securities that comes from the market. Real estate, a business interest, art and collectibles usually need a qualified appraisal. These values matter beyond the estate tax, because they generally become the heirs' cost basis for future capital gains.

If values fell after the death, the executor can elect alternate valuation on Part 3, line 1. Assets are then valued 6 months after the death, or on the date they were sold or distributed if that came first. The rules are strict:

• The election must lower both the gross estate and the total estate and GST tax. An estate that owes no tax cannot use it just to change basis.
• It applies to all the property, not selected assets.
• It is made on the return, and a late return can include it only if filed no later than 1 year after the due date (including extensions).
• Once made, it cannot be revoked.

Form 8971: telling heirs their basis

An estate that is required to file Form 706 must also file Form 8971 with the IRS and give each beneficiary a Schedule A listing the estate tax value of what they received. This keeps heirs from later claiming a higher basis than the estate reported. It is due 30 days after the Form 706 due date (including extensions) or 30 days after the Form 706 is filed, whichever comes first, and it is filed separately from the 706.

It is not required when the return is filed only to elect portability, only to make a GST allocation or election, or only as a protective filing. So an estate filing only for portability usually skips it. If you later distribute different property than you listed, you send updated schedules.

The estate tax closing letter

Executors usually wait for confirmation that the IRS has accepted the return before making final distributions, because the executor can be personally liable for unpaid estate tax. That confirmation is the estate tax closing letter. The IRS issues one only on request, through Pay.gov (search for "estate tax closing letter"), and charges a user fee.

• Fee: $56 for requests made on or after May 21, 2025. Final regulations (T.D. 10055 (final regulations, September 2026)) raise it to $76 for requests the IRS receives from late October 2026.
• Timing: request it at least 9 months after filing Form 706. If the return is under examination, wait until at least 30 days after the exam closes.
• Who gets it: only the executor listed on the return and representatives named on Form 2848 or 8821.
• Free alternative: an account transcript showing transaction code 421 means the return was accepted as filed. Your tax professional can pull it, or you can request it on Form 4506-T.

How state estate tax returns relate to Form 706

13 jurisdictions have their own estate tax, most with much lower exemptions than the federal one. An estate far below $15 million can still owe state tax, and most state returns start from the federal numbers:

• New York requires a completed federal Form 706 with all schedules, even when no federal return is due.
• Minnesota requires you to complete a federal Form 706 to figure the Minnesota tax, even when you will not file it with the IRS.
• Maryland asks for the federal 706, or a pro forma federal 706 with schedules if no federal return is required.
• Massachusetts asks for a federal Form 706 in its July 1999 version, plus the current federal return if one is filed.
• Illinois expects its Form 700 to go in with a federal 706, though an estate that is not federally taxable can present the information another way.

Because the state return borrows the federal figures, values, deductions and elections, prepare the two together. Use the calculator for the state where the person lived (or owned real estate) to see whether a state return is due.

Not sure which state applies? Start with the estate tax calculator hub. If the person made large gifts in the last few years of life, also read the executor section of our gift tax exclusion guide: New York and Minnesota add some of those gifts back.