Do We Have to File Form 706, the Federal Estate Tax Return?

Who Has to File Form 706 in 2026?

The filing trigger is straightforward. A return is required when the gross estate plus adjusted taxable gifts exceeds the basic exclusion amount (the threshold below which no estate tax is owed). For a person who died in 2026, that exclusion is $15,000,000.

The gross estate counts everything the person owned or controlled at death. Real estate, bank accounts, retirement accounts, life insurance the decedent owned on his or her own life or that was payable to the estate, the decedent's share of jointly held property, interests in trusts where the person held certain powers, and property given away but over which the person kept some control all count toward the total. The gross estate is not the same as the probate estate. Assets that pass outside of probate still count toward the gross estate for this purpose.

Adjusted taxable gifts are lifetime gifts that exceeded the annual exclusion in any year. Those gifts reduced the lifetime exclusion as they were made, so they come back into the calculation at death.

For an estate that falls well below $15,000,000, no return is required and no tax is owed. The personal representative (the person appointed by the court to handle the estate, also called the executor) can proceed with probate and distribution without preparing a federal estate tax return. An income tax return for the estate may still be required if the estate earns $600 or more.

The question changes when a married person dies. Even if the estate is far below the exclusion, the surviving spouse may want to file a return to preserve something called portability.

When Is Form 706 Due?

Form 706 is due nine months after the date of death. A death on April 8, 2026 makes the return due January 8, 2027. A death in July 2026 makes the return due in April 2027.

The personal representative may request an automatic six-month extension of time to file by submitting Form 4768. An extension moves the filing deadline from nine months to fifteen months after death, but the extension does not move the time to pay. Any tax owed is still due at the original nine-month mark. Interest runs on any unpaid balance from that date, even if the estate filed for an extension of time.

An extension of time to pay is a separate request on the same form. The IRS treats that request as discretionary. If the estate expects to owe tax and cannot pay on time, it should make both requests on Form 4768.

The filing extension pushes back the paperwork. The payment deadline stays where it is. The distinction matters because late payment carries its own penalty and interest on top of any late filing penalty.

For an estate that owes nothing and is filing only for portability, the deadline question may seem less urgent. The estate still has nine months from death, but if it misses that window, a simplified late election is available for up to five years.

Should You File Form 706 Even If No Tax Is Owed?

A surviving spouse may use the deceased spouse's unused exclusion, but only if the estate elects portability. The election is made on a filed Form 706. The return may be filed on time or, for an estate that was not otherwise required to file, within five years of death under a simplified procedure.

The math shows why this matters. Each person has a $15,000,000 exclusion in 2026. A first spouse dies with an estate of $3,000,000, all passing to the children. The estate uses $3,000,000 of the exclusion, and $12,000,000 remains unused. If the estate files Form 706 and elects portability, that $12,000,000 transfers to the surviving spouse. The survivor then has a combined exclusion of $27,000,000, enough to shelter a much larger estate at the survivor's later death.

If the first estate does not file, the unused $12,000,000 is not transferred. The survivor keeps only the survivor's own $15,000,000 exclusion. A family that expects the survivor's estate to grow may regret not electing portability when they had the chance. The five-year late election may still be available, but waiting adds risk.

One limit applies. The surviving spouse may use only the last deceased spouse's unused exclusion. If the survivor remarries and the second spouse later dies, the unused exclusion from the first spouse is replaced by whatever the second spouse leaves. A survivor who remarries and wants to keep the first spouse's unused exclusion should consider planning before the second spouse dies.

A portability-only return still requires a properly prepared Form 706. The executor must describe the assets in the first estate, show which assets qualify for the marital or charitable deduction if those deductions apply, and provide a good-faith estimate of value for those deducted assets. The return need not contain date-of-death appraisals for property passing entirely to the spouse or to charity, but it must otherwise be complete. The IRS may examine the deceased spouse's return later when the surviving spouse uses the unused exclusion, even after the normal limitations period.

What If You Missed the Nine-Month Deadline?

A family that missed the nine-month filing deadline may still elect portability if the estate was not otherwise required to file. The IRS created a simplified late-election procedure for exactly this situation. Under that procedure, the executor "must file a complete and properly prepared Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on or before the fifth annual anniversary of the decedent's date of death."

The simplified procedure is available when the decedent was survived by a spouse, died after December 31, 2010, and was a United States citizen or resident. The gross estate plus adjusted taxable gifts must have been below the exclusion amount for the year of death, so the estate was not otherwise required to file. No return was filed on time, and the executor did not elect portability on a timely return. An executor who filed on time cannot use this procedure to fix a missing portability election.

The return must state at the top that it is filed under the revenue procedure to elect portability. The return still needs to be complete and properly prepared. For an estate not required to file, the executor does not need to report full date-of-death values for property that qualifies for the marital or charitable deduction, but the assets must be described, the deduction must be shown to apply, and a good-faith estimate of value must be given.

The five-year window is measured from the date of death. A person who died on March 1, 2022 has until March 1, 2027 to file. A surviving spouse who remarries and then loses that second spouse keeps only the second spouse's unused exclusion, so the late election on the first spouse's estate may no longer help. The IRS may examine the deceased spouse's return later if the survivor uses the unused exclusion, even after the normal limitations period has closed.

What Goes on the Return?

Form 706 reports every asset the decedent owned or controlled at death, valued as of the date of death. The gross estate includes property in the decedent's name, the decedent's share of jointly held property, revocable trust assets, retirement accounts with the decedent as owner, life insurance the decedent owned on his or her own life, and property over which the decedent held a general power of appointment. Each asset is listed on the appropriate schedule with a date-of-death value.

The estate may choose alternate valuation instead, valuing assets six months after death. Alternate valuation is allowed only if it lowers both the gross estate and the estate tax. An estate that owes no tax cannot elect alternate valuation.

The marital deduction removes property passing to the surviving spouse from the taxable estate. A trust for the spouse may qualify for the marital deduction if it meets certain requirements. The election to treat a trust as qualified terminable interest property (a QTIP trust) is made on Schedule M of the return. Once made, the election is irrevocable.

A family business may qualify for installment payments if the business is more than 35 percent of the adjusted gross estate. The estate may pay tax over up to 14 years, with up to 5 years of interest only followed by up to 10 annual installments. The interest rate is 2 percent on the first $1,940,000 for 2026. Special-use valuation allows farm or business real estate a maximum reduction of $1,460,000 for 2026.

What Happens After You File?

The IRS reviews the return and may accept it as filed or open an examination. A closing letter confirming that the estate has no further liability costs $56, requested through Pay.gov. The IRS suggests waiting at least 9 months after filing before requesting the letter. An alternative is the estate's IRS account transcript showing transaction code 421, which means the return was accepted as filed or an examination concluded.

Form 8971 (the basis consistency statement) is required only when a Form 706 is required by law. A portability-only return, filed by choice when the estate was not otherwise required to file, does not trigger Form 8971. When required, Form 8971 is due the earlier of 30 days after the return's due date (including extensions) or 30 days after the return is actually filed. Each beneficiary receives a Schedule A showing only that beneficiary's share. Penalties apply even when no tax is due on the estate.

The return also documents the basis that heirs take in inherited property. Federal law provides that the basis of property in the hands of a person acquiring the property from a decedent is generally the fair market value at the date of death. The values reported on Form 706 become the heirs' starting point for measuring gain or loss on a later sale. A higher reported value means a higher basis, which means less capital gain when the heir sells. The step-up in basis applies whether or not a return is filed, but a return puts the values on record for when the heirs need them later.

Does Florida Have Its Own Estate Tax Return?

Florida does not collect an estate tax for anyone who died after December 31, 2004. The state statute still exists on the books, but it ties Florida's tax to a federal credit that Congress eliminated. The result is a tax that calculates to zero every time.

For years, personal representatives filed one of two affidavits. Form DR-312 was used when no federal return was required. Form DR-313 was used when a federal return was required but no Florida tax was due. Neither affidavit went to the Department of Revenue. The affidavits were recorded in the property records to clear the estate tax lien from the property.

A 2023 law changed the rule. For probates commenced on or after July 1, 2023, personal representatives no longer file DR-312 or DR-313. No Florida estate tax lien arises for anyone who died after 2004. The current DR-312 is limited to proceedings that began before July 1, 2023.

A title agent working on an older file may still ask for one. The agent is looking at a property that passed through a probate opened before the 2023 change, and the title commitment may require the recorded affidavit. In that situation, the personal representative can still sign and record the appropriate form. For any probate opened on or after July 1, 2023, the answer is that no affidavit is required and no lien exists.

The practical effect is that Florida residents today face only the federal estate tax, and only when the gross estate plus adjusted taxable gifts exceeds $15,000,000 for someone who died in 2026. An estate below that figure may still need to file an income tax return if it earns $600 or more.

Form 706, Form 709 and Form 1041: Which Return Is Which?

Three federal returns touch an estate, and each one covers a different tax with a different trigger.

Swipe the table sideways to compare all three returns.

Form 706 is about what the person owned at death. Form 709 is about what the person gave away during life. Form 1041 is about income the estate earns after death, such as interest, dividends, rent or gains on sales.

The personal representative files Form 706 for the estate tax and files Form 1041 for any income the estate earns while it remains open.

The filing trigger for Form 706 is the gross estate plus adjusted taxable gifts exceeding $15,000,000. An estate with $14,000,000 in assets at death but $2,000,000 in prior taxable gifts still crosses the threshold. Form 1041 is required when the estate has $600 or more of gross income from any source.

Can the Personal Representative Be Personally Liable for Estate Tax?

The personal representative (the fiduciary appointed by the court to handle the estate) who distributes to heirs or pays other debts before paying the federal estate tax can be personally liable to the extent of the distribution. The IRS can collect from the fiduciary directly.

Late filing carries a penalty of 5 percent of the unpaid tax for each month the return is overdue, up to 25 percent. Late payment carries a penalty of 0.5 percent of the unpaid tax for each month, also up to 25 percent. Interest runs on top of the penalties. These penalties hit the estate's tax liability.

A personal representative who is concerned about personal exposure can ask the IRS in writing for a discharge from personal liability. The request starts a clock. The IRS must respond within a set period stating the amount of tax due.

The safest course is to wait. File the return on time (or on extension), pay any tax owed by the nine-month date, and hold distributions until the IRS has accepted the return. A closing letter or an account transcript showing the return was accepted tells the personal representative that the estate's tax account is settled.

The personal representative who jumps ahead and distributes everything to the heirs before the tax is paid has a real problem. The IRS can come after the fiduciary personally.

Form 706 Step by Step: A Timeline From Death to Closing Letter

The timeline for Form 706 runs about 18 months from death to a closing letter. Each step has a deadline, and missing one creates problems that are harder to fix later.

Month 0 is the death itself. The personal representative gathers records, orders death certificates and begins an inventory of what the person owned. Bank statements, brokerage records, real estate appraisals and life insurance policies all feed the values the return will report.

Month 9 is the due date for the return. If the gross estate plus adjusted taxable gifts exceeds $15,000,000 for a 2026 death, the return must be filed and any tax must be paid by then. A separate request for an extension of time to pay is available but is discretionary. A personal representative who needs more time to gather records can file Form 4768 and receive an automatic 6-month extension to file.

Month 15 is the extended due date for filing. Form 8971, which reports each beneficiary's basis in the assets, is due within 30 days. The earlier-of rule (30 days after the return is filed or 30 days after the due date with extensions, whichever comes first) determines the deadline. Form 8971 is required only when a return is required by law. Each beneficiary receives only the schedule listing that beneficiary's inherited property.

After filing, the IRS suggests waiting at least 9 months before requesting a closing letter. The letter costs $56 through Pay.gov. An account transcript showing transaction code 421 (accepted as filed or examination concluded) is an alternative. Either document lets the personal representative distribute remaining assets and close the estate.

Common Mistakes Families Make With Form 706

Skipping the portability return is a mistake an estate under $15,000,000 can make. The estate owes no tax and has no filing requirement, but the deceased spouse's unused exclusion can still be preserved. When the first spouse dies and uses little of the $15,000,000 exclusion, the survivor can add the unused portion to their own exclusion, but only if a return is filed. A family that skips the return may still have time under the five-year late election, but waiting adds risk.

Assuming the extension extends payment is another trap. Form 4768 gives the estate 6 more months to file, but any tax is still due at 9 months. Interest and penalties begin running on unpaid amounts after that date, even if the return itself is timely filed on extension.

Distributing assets before the IRS is paid creates personal liability for the representative. A fiduciary who pays heirs or other creditors ahead of a federal tax claim is personally liable for the tax, up to the amount distributed.

Filing a portability return with blank values where estimates would be accepted is a problem. An estate not required to file may give a good-faith estimate for property qualifying for the marital or charitable deduction, but must otherwise fill the return completely.

Forgetting Form 8971 when a return is required triggers penalties even when no estate tax is owed. Form 8971 is due within 30 days, calculated under the earlier-of rule (30 days after filing or 30 days after the due date with extensions). A portability-only return is exempt.

Frequently Asked Questions

Common Situations

A surviving spouse had lost her husband in March 2026. His estate was about $4,000,000, all passing to their children, well under the $15,000,000 exclusion. She planned to skip Form 706 because no tax was owed. Her accountant pointed out that filing a portability return would preserve about $11,000,000 of unused exclusion for her own estate. The children's share needed to be valued and reported. She filed by December 2026 and preserved the unused exclusion for later. Whether that exclusion protects her children depends on her estate's size and on whether she remarries before her death.

A personal representative finished a Florida probate and distributed everything to the heirs in month seven, before the 9-month Form 706 deadline. The estate was under the exclusion for that year and no tax was owed. No one filed a return by the deadline. Years later, the surviving spouse's estate had grown well above $15,000,000. Her estate owed tax on the amount over her own exclusion because no one had elected portability of the first spouse's unused exclusion. The five-year late election was available, but the family had not filed in time. The unused exclusion was gone.

The Portability Return the IRS Reopened Two Years After Its Closing Letter

I have come across a case that shows what a Form 706 closing letter is worth. A married couple, Frank and Minnie Sower, made taxable gifts between 2003 and 2005, each giving away just under $1,000,000. The couple filed a gift tax return for every year they did it, which is ordinary people doing ordinary planning. Frank died in February 2012. His estate filed Form 706 on time. The return showed no tax due and elected portability, reporting $1,256,033 of unused exclusion to carry over to Minnie. The preparer listed $945,420 of lifetime gifts on the worksheet inside the return, but the line on the return itself said zero.

In November 2013 the IRS sent a closing letter. The letter said the return had been accepted as filed and would not be reopened absent fraud, a clearly defined substantial error or a serious administrative error. Minnie had died three months earlier. Her estate filed its own Form 706, claimed the $1,256,033 from Frank and paid $369,036 in tax, then paid another $386,424 to fix an arithmetic mistake. In February 2015 the IRS examined Minnie’s return, and as part of that examination reopened Frank’s. The IRS cut the carried-over exclusion from $1,256,033 to $282,690 because of Frank’s lifetime gifts, and sent Minnie’s estate a notice of deficiency for $788,165. In September 2017 the United States Tax Court ruled for the IRS on every point. The closing letter is not a closing agreement and does not stop the IRS from correcting the carried-over amount.

Practice pointer. The failure is that the gifts reported on every Form 709 over the years never made it onto the line of the first spouse’s Form 706, and the family relied on a letter that closes nothing for the second estate. The file for a portability return starts with every gift tax return the first spouse ever filed, and the surviving spouse’s plan is built on the carried-over number as the IRS will compute it, not as the return reported it.

Sources of Law

• IRC §6018 (who must file); IRC §2010(c) (basic exclusion and the DSUE); Rev. Proc. 2025-32 (2026 figures: $15,000,000 basic exclusion; $19,000 annual gift exclusion; $1,460,000 §2032A ceiling; $1,940,000 §6601(j) 2% portion). IRS 2026 inflation adjustments · Rev. Proc. 2025-32
• Instructions for Form 706 (Rev. 09/2025) (9-month due date; Form 4768 automatic 6-month extension of time to file, not pay; portability election mechanics; alternate valuation §2032; QTIP election on Schedule M; §6166 installment payment on the 35% closely-held-business test; §2032A special-use valuation). irs.gov/instructions/i706
• Rev. Proc. 2022-32 (simplified late portability-only filing up to the fifth anniversary of death for estates with no §6018(a) filing requirement, with the required legend on the return). Rev. Proc. 2022-32
• Instructions for Form 8971 (required only when Form 706 or 706-NA is required under §6018; due the earlier of 30 days after the return’s due date or 30 days after actual filing; Schedule A to each beneficiary; portability-only and protective filings excepted; penalties under §§6721 to 6722). irs.gov/instructions/i8971
• IRS, Frequently asked questions on the estate tax closing letter ($56 Pay.gov user fee effective May 21, 2025, reduced from $67 by T.D. 10038; account transcript transaction code 421 as the free alternative). irs.gov closing letter FAQ
• IRC §6651 (late-filing and late-payment penalties); 31 U.S.C. §3713(b) (fiduciary personal liability for distributions ahead of federal claims); IRC §2002 (executor pays the tax); IRC §2204 (executor’s discharge from personal liability; Form 5495); Instructions for Form 1041 (estate income tax return required at $600 of gross income). irs.gov/instructions/i1041
• Florida: ch. 2023-207, Laws of Florida, amending §§198.26, 198.32, and 733.2121, Fla. Stat. (affidavits no longer required and no lien for post-2004 deaths, for probates commenced on or after July 1, 2023 and pending ones without final discharge); Fla. Dept. of Revenue, TIP 23C03-01 (June 19, 2023); Form DR-312 (R. 01/24) and its instructions (recorded with the clerk of the circuit court where the decedent owned property; never sent to the Department of Revenue; evidence of nonliability removing the estate tax lien). TIP 23C03-01 · floridarevenue.com estate tax (All sources retrieved 2026-08-08.)
• Estate of Sower v. Commissioner, 149 T.C. No. 11 (Sept. 11, 2017): the IRS may examine a predeceased spouse’s estate tax return to determine the deceased spousal unused exclusion amount under IRC §2010(c)(5)(B); an estate tax closing letter stating the return was accepted as filed is not a closing agreement under §7121 and does not estop the IRS; the predeceased spouse’s limitations period is not implicated where no tax is assessed against that estate. DSUE reduced from $1,256,033 to $282,690; deficiency $788,165. Corpus file: reference/caselaw/tax/estate-of-sower-149-tc-no-11.md (CourtListener, pulled 2026-10-31).

Updated on October 31, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. This article is general information about federal estate tax procedure and Florida practice, not legal or tax advice, and does not create an attorney-client relationship. Income tax return preparation belongs with your CPA, and we coordinate with them on the estate’s filings. Your result depends on your specific facts. Do not send confidential information until we have agreed to represent you.