An executor generally has to file a federal estate tax return, Form 706, within nine months of the date of death when the gross estate plus adjusted taxable gifts exceeds $15 million for someone who died in 2026. That is the main trigger, but it isn’t the only one. A return is also required whenever the executor wants to transfer a deceased spouse’s unused exclusion to the surviving spouse, no matter how small the estate. Miss the deadline with tax owed and the penalties start stacking the following month.
The $15 Million Federal Threshold
For deaths in 2026, Form 706 is required when the gross estate combined with adjusted taxable gifts made during the decedent’s lifetime crosses $15,000,000. The One, Big, Beautiful Bill, signed on July 4, 2025, set that figure permanently and indexed it for future inflation.1Internal Revenue Service. What’s New — Estate and Gift Tax The threshold was $13,610,000 for 2024 deaths and $13,990,000 for 2025 deaths, so which year applies matters.2Internal Revenue Service. Frequently Asked Questions on Estate Taxes
The gross estate is broader than most people expect. It covers essentially everything the decedent owned or had an interest in at death, wherever located: real estate, bank and investment accounts, business interests, retirement accounts, life insurance proceeds, the decedent’s share of jointly held property, assets subject to a general power of appointment, certain lifetime transfers where the decedent kept control, annuities, and digital assets.3Internal Revenue Service. Instructions for Form 706 (Rev. September 2025)
One point that trips executors up: filing is required even when deductions and credits eliminate the tax bill. If the gross estate plus adjusted taxable gifts exceeds the threshold, the return goes in. Reporting and paying are two different obligations.
Filing to Preserve a Spouse’s Exemption
An executor also has to file Form 706 when electing to transfer the deceased spouse’s unused exclusion (the DSUE) to the surviving spouse, regardless of estate size.4Internal Revenue Service. Instructions for Form 706 (09/2025) This is the portability election, and it is the reason many small estates file returns they wouldn’t otherwise owe.
Take a spouse who dies in 2026 leaving a $4 million estate. Nothing about the size of that estate requires a return. But if the executor files Form 706 and elects portability, the surviving spouse can add roughly $11 million of unused exclusion to their own $15 million exemption. Skip the filing and that unused exclusion disappears for good. On a family’s future estate tax bill, the cost of missing this election can run into the millions.
The Nine-Month Deadline and Extensions
The federal estate tax return is due nine months after the date of death.2Internal Revenue Service. Frequently Asked Questions on Estate Taxes Someone who dies on March 15 has a return due by December 15 of the same year.
An executor who needs more time can file Form 4768 before the original deadline and get an automatic six-month extension to file.5Internal Revenue Service. Form 4768 – Application for Extension of Time to File a Return and/or Pay U.S. Estate Taxes Read that carefully. The extension buys time to file the paperwork, not time to pay. Interest accrues on any unpaid tax from the original nine-month date whether the extension was granted or not.2Internal Revenue Service. Frequently Asked Questions on Estate Taxes So the executor still has to estimate the tax owed and pay it by month nine, even if the completed return arrives later.
Penalties for Filing or Paying Late
Missing the deadline without a valid extension triggers two penalties that run at the same time.
The failure-to-file penalty is 5 percent of the unpaid tax for each month or partial month the return is late, capped at 25 percent. If the IRS finds the failure to file was fraudulent, the ceiling rises to 75 percent.6Office of the Law Revision Counsel. 26 U.S. Code 6651 – Failure to File Tax Return or to Pay Tax
The failure-to-pay penalty is a separate 0.5 percent per month on tax that stays unpaid after the due date, also capped at 25 percent. That rate climbs to 1 percent if the tax is still unpaid ten days after the IRS issues a notice of intent to levy.7Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges
Interest runs on top of both penalties, compounding daily at the federal short-term rate plus 3 percent from the original due date until the balance is paid. On the sort of estate that owes federal tax at all, these charges add up quickly. Filing on time with a reasonable estimate of what’s owed almost always costs less than waiting for a perfect return.
Late Portability Relief
Executors who missed the nine-month deadline solely to elect portability have a second chance. Under Revenue Procedure 2022-32, a complete Form 706 can be filed on or before the fifth anniversary of the decedent’s death to claim the portability election, with no user fee.8Internal Revenue Service. Revenue Procedure 2022-32 This relief only covers estates that weren’t otherwise required to file because they fell below the threshold. After five years, the door closes.
State Estate and Inheritance Taxes
The federal $15 million floor is not the whole picture. About a dozen states and the District of Columbia impose their own estate taxes, and several set filing thresholds much lower than the federal number, sometimes as low as $2 million of gross estate. An estate well under the federal threshold can still owe a significant state estate tax and be required to file a state return.
A handful of states also impose an inheritance tax, which works differently. It taxes the individual beneficiaries based on what they receive and their relationship to the decedent. Spouses and close relatives are often exempt or taxed lightly, while unrelated beneficiaries can face rates up to 16 percent. One state imposes both an estate tax and an inheritance tax. Because the rules vary so much, checking the requirements in the decedent’s state of residence, plus any state where they owned real estate, belongs at the top of the executor’s list.
A Note on the Non-Citizen Surviving Spouse
The unlimited marital deduction that normally lets a decedent leave any amount to a surviving spouse tax-free does not apply when the surviving spouse is not a U.S. citizen.9Office of the Law Revision Counsel. 26 USC 2056 – Bequests, Etc., to Surviving Spouse A qualified domestic trust (QDOT) can preserve the deduction, but it has to be in place before the estate tax return is due, which makes early professional help important in these situations.
Who Has to File
The executor named in the will is responsible for filing Form 706. If there is no will, or the named executor can’t serve, a probate court appoints an administrator. When all assets sit in a trust and nothing goes through probate, the trustee generally takes over the filing.2Internal Revenue Service. Frequently Asked Questions on Estate Taxes
Executors can hire accountants and attorneys to prepare the return, and those fees are deductible as estate administration expenses. Delegation does not shift the legal responsibility, though. An executor who distributes estate assets to beneficiaries before paying the federal estate tax becomes personally liable for the unpaid tax up to the amount distributed.10Office of the Law Revision Counsel. 31 U.S. Code 3713 – Priority of Government Claims The federal government has priority over other debts, and executors who miss that rule can end up paying estate tax out of their own pocket.
Don’t Confuse Form 706 With Form 1041
Form 706 is the transfer tax return on the decedent’s accumulated wealth. It is a separate obligation from the estate’s income tax return, Form 1041, which reports income the estate earns after death: interest, dividends, rents, and the like. Form 1041 is required whenever the estate generates $600 or more of gross income during the tax year and is due by the 15th day of the fourth month after the estate’s tax year ends.11Internal Revenue Service. 2025 Instructions for Form 1041 An estate that owes no federal estate tax can still owe income tax, so both filings need their own timeline.