Asking for an Extension to File an Estate Tax Return
When and How to File Form 4768 for an Estate Tax Extension
An estate tax return is normally due within nine months of a decedent's date of death, but some estates need a little more time to determine whether Form 706 is even required, much less to value the decedent's property and actually file the return. The IRS therefore provides estates with a way to request a little more time.
Estates can file IRS Form 4768 to ask for an extension to file Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return.
The Federal Estate Tax
Estates valued at more than $11.4 million are liable for the tax on the balance over this threshold for deaths occurring in 2019. This exemption is almost twice what it was in 2017, thanks to the Tax Cuts and Jobs Act.
The federal exemption threshold is indexed for inflation, so it can be expected to increase somewhat in 2020.
Filing Form 4768
Filing Form 4768 automatically gives the executor of an estate or the trustee of a living trust an additional six months to file a tax return—Forms 706, 706-A, 706-D, 706-NA, or 706-QDT. These are all returns applicable to certain situations.
Form 4768 must be filed on or before the due date for Form 706, or for the equivalent form for a given estate. The estimated tax should be paid by that date as well.
Form 4768 offers some additional "discretionary" relief as well. Part II of the form allows executors or trustees to ask for more than an additional six months to file the tax return if they attach a statement explaining why additional time is necessary.
The executor or trustee can also ask for additional time to pay any estate tax that is due by completing Part III of the form. This also requires attaching a written statement of explanation.
If you simply don't know the value of the estate yet so calculating an estimated tax is impossible, you can check a box indicating this. Otherwise, the executor or trustee should include the anticipated tax payment when filing Form 4768.
The Portability Election
The IRS recognizes a "portability election" that allows surviving spouses to claim any leftover portion of a decedent's federal estate tax exemption to apply to their own estates when they die.
If a decedent dies owning a taxable estate worth $5 million, the surviving spouse can claim the $6.4 million balance of the exemption to shield the subsequent estate from taxation at the survivor's time of death.
Claiming the portability election requires that Form 706 must be filed for the decedent's estate, even if no tax is due because its value falls below the exemption. Filing Form 4768 immediately at the time of death gives the surviving spouse 15 months to decide whether they want to claim a portability election.
Some restrictions apply, and the terms of this election can change yearly. Filing the Form 706 extension gives a surviving spouse more time to explore options.
An Important 2019 Update!
Effective Sept. 30, 2019, Forms 4768 should no longer be sent to the address that appears on page 2 of forms downloaded prior to that date. Beginning in October 2019, they must be forwarded to: Internal Revenue Service Center, Attn: E&G, Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915.
NOTE: Tax laws can change frequently and the above information might not reflect the most recent changes. Please consult with an attorney for the most up-to-date advice if you're dealing with an estate that might owe estate taxes, or if you're considering making a portability election. The information contained in this article is not legal or tax advice, and it is not a substitute for legal or tax advice.