Who Must File Estate Tax Return & When ?

Estate tax in the United States comes into play on the transfer of assets of the estate of a deceased person to their beneficiaries and heirs via a will or as per the state laws of intestacy. Apart from the transfer by will , certain other transfers that are subject to the tax include transfer of an intestate estate or trust, or the payment of certain life insurance benefits or sums to beneficiaries.

 Section 6018 of The Internal Revenue Code provides law for filing of estate tax return. The law provides the circumstances in which filing the tax return of estate by the executors is compulsory . The provision under section 6018 of IRC also provides some exceptions to the rule of filing estate tax return .This article discusses an estate tax—not income tax return of an estate .

Who is required to file Estate Tax Return?

The duly appointed personal representative of the decedent’s estate must file the return. If there is more than one personal representative, the return must be made jointly by all. If there is no personal representative appointed, every person in actual or constructive possession of any property of the decedent is required to make and file a return.

When is Filing of Federal Tax Return for the  Estate Compulsory ?

Filing of federal estate tax return is must in following situations

1.The value of estate is more than threshold for compulsory filing of tax return of an Estate.

If the gross estate of the decedent US citizen or resident of USA  computed by  increasing the decedent’s adjusted taxable gifts and specific gift tax exemption, is valued at more than the  threshold for the tax  year of the decedent’s death , then return is compulsory . The estate tax  filing threshold tax year wise is as under :

Tax Year	Filing Threshold
2020	$11.58 million
2019	$11.40 million
2018	$11.18 million
2017	$5.49 million
2016	$5.45 milllion

2.  Return is Compulsory if Surviving Spouse  Opts for  transfer a DSUE

A surviving spouse can elect to transfer the unused estate tax lifetime exemption limit to himself or herself . In other words , the estate can elect to transfer any deceased spousal unused exclusion (DSUE) amount to a surviving spouse. In such a case , estate tax return must be filed regardless of the size of the gross estate or amount of adjusted taxable gifts.

3.  If decedent was nonresident

If a nonresident decedent , who was not a US citizen at the time of death , has assets in USA , then estate tax return filing is compulsory if the gross estate value of the decedent is more $60,000. Here is the law under section 6018 (a)(2)

(2) Nonresidents not citizens of the United States
In the case of the estate of every nonresident not a citizen of the United States if that part of the gross estate which is situated in the United States exceeds $60,000, the executor shall make a return with respect to the estate tax imposed by subtitle B

Refer to Some Nonresidents with U.S. Assets Must File Estate Tax Returns to learn more.

Estate tax return form ?

Form 706 is the  estate tax return form to figure the estate tax as well as used to compute the generation-skipping transfer (GST) tax imposed by Chapter 13 on direct skips. Consult  instruction for Form 706 

Do not confuse estate tax return with estate income tax return !

As stated earlier ,  the Estate Tax return  needs to be filed  on the transfer of assets from the decedent to their beneficiaries and heirs (the estate tax), whereas  income tax return for an estate needs to be filed for the  income generated by assets of the decedent’s estate.

When is Estate Tax Return Due?

The due date for the estate tax return is nine months after the date of death of a person. However, IRS provides a six month extension on request provided estimated tax is paid before the due date.Please note that , if estate fails to file tax return by the due date without reasonable case, late filing penalty may be imposed .

In Liftin v. United States, 2013-5103 (June 10, 2014), the U.S. Court of Appeals for the Federal Circuit affirmed a Court of Federal Claims’ finding that a penalty for a late-filing estate tax return was mandatory. 

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