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Filing Form 706: A Step-by-Step Guide for Estates


Losing a loved one is a difficult and emotional journey. As you navigate through this challenging time, you may be required to handle several administrative tasks, including the filing of IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. This guide will walk you through the steps and explain what to include on this return.


Step 1: Determine the Necessity to File (#DetermineNecessity)

You'll need to file Form 706 if the total value of the estate exceeds the federal estate tax exemption in the year of your loved one's death. For deaths in 2021, this exemption was $11.7 million. If you're unsure, it's advisable to consult with a tax professional or attorney.


Step 2: Gather Required Information (#GatherInformation)

To fill out Form 706, you'll need detailed information about the deceased's assets and liabilities, including real estate, bank accounts, investments, trusts, annuities, and debts.


Step 3: Understand Valuation (#UnderstandValuation)

The assets included in the estate are generally valued at their "fair market value" at the time of death. Special use valuation rules may apply to certain types of property, such as farms and closely-held businesses.


Step 4: Complete the Form (#CompleteForm)

Form 706 is extensive and requires detailed reporting of all assets, deductions, and calculations for the taxable estate. This includes the gross estate, deductions (like funeral expenses and debts), and, ultimately, the taxable estate.


Step 5: Include Schedules (#IncludeSchedules)

Form 706 includes several schedules (A through U) where you detail the assets and deductions. For example, Schedule I is for jointly-held property, while Schedule O is for charitable deduction.


Step 6: File the Form (#FileForm)

You must file Form 706 within nine months after the date of death. If you need more time, you can request a six-month extension using Form 4768.


Handling the estate tax filing process after a loved one's death can be complex. However, understanding Form 706 and what it includes can make the task more manageable. #Form706 #EstateTax


Disclaimer: This blog post provides general information and discussions about tax matters. The information provided in this post is not tax advice and should not be relied upon as such. If you have any tax-related questions or concerns, consult with a tax professional. #ProfessionalAdvice


Remember, tax laws change regularly, and the details of the estate tax may be different based on when your loved one passed away. Stay updated on the latest tax laws to ensure you're complying with current requirements. #TaxUpdates

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