1. Money

Overview of 2013 Estate Tax Filing Requirements

Which 2013 Estates Need to File Form 706?

By

The passage of the American Taxpayer Relief Act into law on January 2, 2013 ushered in some changes to the laws governing federal estate taxes, gift taxes and generation skipping transfer taxes for deaths occurring in 2013 when compared with the laws in effect in prior years. Below is a summary of the rules that apply to the estates of decedents who die between January 1, 2013 and December 31, 2013.

Decedent is Single, Gross Estate is Valued Less Than $5,250,000

If the decedent was single at the time of death and the gross value of his or her estate does not exceed $5,250,000, then the estate will not be required to file IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Nonetheless, the heirs should consult with an estate planning attorney or tax attorney in order to determine if Form 706 should be filed for other reasons, such as locking in date of death values of the decedent's assets to establish their stepped up basis, or allocating the decedent's unused generation skipping transfer tax exemption to testamentary trusts created under the decedent's estate plan.

If it is determined that an estate tax return should be filed, then it will be due 9 months after the decedent's date of death. File IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.

Decedent is Single, Gross Estate is Valued Over $5,250,000

If the decedent was single at the time of death and the gross value of his or her estate exceeds $5,250,000, then the estate will be required to file IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. The return will be due 9 months after the decedent's date of death. File IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.

What is the anticipated turn around time for the IRS to review IRS Form 706? Expect it to take at least 6 months from the date of filing the return before the IRS will even look at it.

Decedent is Married, Gross Estate is Valued Less Than $5,250,000

If the decedent was married at the time of death and the gross value of his or her estate does not exceed $5,250,000, then the estate will not be required to file IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Nonetheless, the surviving spouse should consult with an estate planning attorney or tax attorney in order to determine if Form 706 should be filed in order to lock in date of death values of the decedent's assets to establish their stepped up basis or to elect portability of the estate tax exemption. Likewise, if the decedent implemented AB Trust planning or generation skipping trusts into his or her estate plan, then the surviving spouse should consult with an estate planning attorney or tax attorney in order to determine if Form 706 should be filed to report the assets used to fund the B Trust as well as their date of death values or to properly allocate the decedent's unused generation skipping transfer tax exemption.

If it is determined that an estate tax return should be filed, then it will be due 9 months after the decedent's date of death. File IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.

Decedent is Married, Gross Estate is Valued Over $5,250,000

If the decedent was married at the time of death and the gross value of his or her estate exceeds $5,250,000, then estate will be required to file IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. The return will be due 9 months after the decedent's date of death. File IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.

When Will an IRS Estate Tax Closing Letter Be Received?

When the IRS has accepted a federal estate tax return, it issues an "Estate Tax Closing Letter." So what is the anticipated time it will take for an estate to receive an Estate Tax Closing Letter from the IRS? Since from personal experience it takes at least 6 months from the date of filing the estate tax return before the IRS will even look at it, don't expect to receive an Estate Tax Closing Letter for at least 6 months. And if the return is audited, add at least 4 to 6 months on to the original 6 months.

For more information about the Estate Tax Closing Letter and for tips on checking up on the status of a federal estate tax return, refer to How Long Does it Take to Receive an Estate Tax Closing Letter from the IRS?

Summary of 2013 Estate Tax Filing Deadlines

9 months from date of death - Due date for 2013 Form 706 or Form 4768

15 months from date of death - Due date for 2013 Form 706 for estates that timely filed Form 4768

6 months from date Form 706 is filed - The anticipated amount of time it will take before the IRS will review Form 706

©2014 About.com. All rights reserved.