What Is an Estate Tax Return?
An Estate Tax Return (IRS Form 706) is a federal tax form used to report the value of a deceased person’s estate and calculate any estate tax owed. It applies only to estates that exceed a certain value.
When Do You Need to File an Estate Tax Return?
You only need to file Form 706 if the gross estate exceeds the IRS threshold in the year of death.
- For 2024 deaths, the federal estate tax exemption is $13.61 million.
- If the estate is worth less than this, no federal estate tax return is required.
Key Considerations:
- The gross estate includes all assets: real estate, cash, stocks, retirement accounts, life insurance (if payable to the estate), and personal property.
- Deductions like mortgages, debts, and administrative expenses may reduce the taxable estate.
What If the Estate Is Below the Threshold?
If the estate’s value is below the exemption limit, you don’t need to file a federal estate tax return. However, there are cases where you may still choose to file, such as:
- To elect portability of the deceased spouse’s unused exemption (DSUE)
- If required under state law (some states have separate estate or inheritance tax thresholds)
Who Files the Estate Tax Return
The executor, administrator, or personal representative of the estate is responsible for:
- Gathering all required documentation
- Determining the gross estate value
- Filing Form 706 within 9 months of the decedent’s date of death (extensions available)
State Estate Tax Considerations
Several U.S. states impose their own estate or inheritance taxes with lower exemption thresholds. Even if a federal return isn’t required, you might need to file a state estate tax return if the estate is located in:
- New York
- Massachusetts
- Oregon
- Washington
- Maryland
- And others
Check with your state’s Department of Revenue for specific requirements.
Final Thoughts
So, do I need to file an estate tax return? If the estate exceeds the federal exemption (or your state’s limit), then yes—you must file IRS Form 706. But even if you’re under the limit, strategic filing may still benefit the surviving spouse or heirs.
