What Is IRS Form 706?
Tax Form 706 Explained
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is a tax form used to compute the federal estate tax and generation-skipping transfer (GST) tax owed by the estate of a decedent.
Learn about the purpose and types of the form as well as how to fill it out and file it.
What Is Form 706?
The estate tax is levied on the whole estate as opposed to the share of the estate that a beneficiary inherits. Similarly, direct skips are transfers to skip persons of interest in a property that is part of the decedent's gross estate, which includes any property in which the decedent had an interest.
Who Uses Form 706?
This tax form should be used by the executor of the estate of any U.S. citizen or resident when either of the following scenarios applies:
- The gross estate is valued at over the basic exclusion amount after adding in adjusted gifts and exemptions; for deaths that occur in 2019, the applicable amount is $11,400,000.
- The executor chooses to transfer the Deceased Spousal Unused Exclusion (DSUE) amount to the surviving spouse, regardless of the size of the gross estate.
To determine whether you meet the first criterion, add:
- The adjusted taxable gifts made by the decedent after December 31, 1976;
- The total specific exemption allowed (before its repeal by the Tax Reform Act of 1976) for gifts made by the decedent after September 8, 1976; and
- The decedent’s gross estate valued at the date of death of the decedent.
The first criterion, in effect, means that any gross estate valued at more than the basic exclusion amount must file Form 706 even if no federal estate tax will be owed after applicable deductions and tax credits have been applied.
The second criterion refers to the portability of the estate tax exclusion, which allows a surviving spouse of a decedent who dies after December 31, 2010 to pick up their deceased spouse's unused estate tax exclusion (referred to as "DSUE") and add it to their own exclusion. For example, if John dies in 2019 and none of his $11,400,000 estate tax exclusion is used, an executor can elect to transfer his unused exclusion to his wife under the portability of the DSUE option. All that is required to elect portability of the DSUE amount to a surviving spouse is to file and complete Form 706 on or before the due date of the return.
Types of Form 706
There are two versions of this tax form: Form 706 and Form 706-NA.
This is the standard form used to figure estate and GST tax liability for decedents who were U.S. citizens or residents.
This tax form, United States Estate (And Generation-Skipping Transfer) Tax Return Estate of Nonresident Not a Citizen of the United States, is also used to compute estate and GST tax liability, albeit for decedents who were classified as "non-resident aliens." The estate tax applies to the transfer of the decedent's taxable estate—not to the receipt of any share of it by a beneficiary.
Where to Get a Form 706
Form 706 and Form 706-NA are both available for download on the IRS' website. The latest available revision and instructions for each form are available for download as PDFs under the "Current Revision" section of the "About Form 706" and "About Form 706-NA" page, respectively. But you should choose the version of the form that corresponds with the relevant date of death of the decedent. The top of the first page of the form notes the dates of death to which the form applies.
How to Fill Out and Read Form 706
The form consists of six parts and 19 supplemental schedules and spans 29 pages in total. Each part provides instructions that are summarized below:
- Part 1—Decedent and Executor: Provide key information about the decedent and the executor, including the decedent's name and Social Security number (SSN) and the executor's name, SSN, and address.
- Part 2—Tax Computation: Using Worksheet TG, the Line 4 Worksheet, and the Line 7 Worksheet, the executor should use this section to figure the estate tax owed by applying the unified rates supplied in Table A to total transfers before and upon death, and then subtracting the gift taxes based on the date-of-death rates.
- Part 3—Elections by the Executor: The executor should use the checkboxes in this part to specify whether they are making elections including the allowance or special-use election or the options to pay estate taxes in installments or postpone a portion of the taxes.
- Part 4—General Information: Executors use this part to reinforce their authorization to serve as the representative for an estate by providing information such as their title and the decedent's death certificate number and marital status. Supplemental information including the death certificate itself will need to be attached.
- Part 5—Recapitulation: Use this section to calculate the value of the total gross estate by supplying the value of various assets (such as real estate and stocks and bonds) and calculating any allowable deductions.
- Part 6—Portability of Deceased Spousal Unused Exclusion (DSUE): Executors should use this part to opt out of portability of the DSUE or specify the DSUE amount that will be transferred to the surviving spouse.
Part 6 provides the estate the option to opt out of portability of the DSUE.
Can Form 706 Be E-Filed?
IRS Form 706 is not among the tax forms that are available as a free-file fillable form and cannot be e-filed. You must mail the completed paper form to the appropriate address.
Where to Mail Form 706
Send the form to the following address:
Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999
If you're using a private delivery service (PDS) designated by the IRS to file and pay in a timely fashion, mail the form to the following address:
Internal Revenue Submission Processing Center
333 W. Pershing Road
Kansas City, MO 64108
How to File Form 706
Executors should download and complete the relevant PDF version of the form. They should then file the first four pages of the return (those sections pertaining to the six main parts) by mail, along with any schedules used to support the elections made on those pages.
The due date for the form and the estate tax payment is nine months within the date of the decedent's death, but you may request an extension using Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes.
Make your estate tax check payable to "United States Treasury" and include the decedent's name, SSN, and "Form 706" on it to facilitate payment processing. Although you may not e-file the form, you may make the payment electronically through the Electronic Federal Tax Payment System (EFTPS).
- IRS Form 706 is used to compute estate and GST tax liability for U.S. citizens and residents.
- An alternate version of the form, Form 760-NA, applies to non-resident decedents.
- The form consists of six parts and 19 supporting schedules spanning 29 pages.
- The form is available as a PDF online and must be filed to the IRS by mail within nine months of the decedent's death. However, the estate tax payment may be made electronically.