What Is A Form 706?

Signing a form

Form 706 is a tax form used to report the value of a deceased person’s estate and to calculate any federal estate tax owed. When a person dies, their assets are often transferred to their heirs through their will, a trust, or intestate succession laws. If the total value of the assets transferred is above a certain threshold, then a federal estate tax return using Form 706 must be filed.

Form 706 includes detailed information about the deceased person’s assets, including real estate, investments, and personal property. The form also includes deductions for expenses such as funeral costs, outstanding debts, and administrative expenses.

The estate tax is calculated based on the value of the estate and any applicable deductions. The current estate tax threshold is $12,920,000.00 (as of 2023), meaning that estates valued at less than this amount are not subject to federal estate tax. If the estate is above this threshold, then the tax rate is 40%. In addition, a 706 may need to be filed to take advantage of Portability. Portability allows the surviving spouse to use the deceased spouse’s unused estate tax exemption.

Filing Form 706 can be complex, and it is important to ensure that it is filed correctly and on time to avoid penalties or other consequences. It is generally recommended to seek the advice of a tax professional when dealing with estate taxation.

We are at your service to provide a range of accounting and tax services tailored to your specific needs. Contact Pace & Associates CPAs today to discuss how we can assist you.


More Posts

Latest Tweets: