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This return has to be filled in by every citizen of the US, irrespective of where they live. Even a resident has to fill up this return even if he or she is not a resident of the United States. In some cases, nonresident aliens might have to fill up form 706-NA to pay estate taxes on property and assets located within the US.
From 2007, it has been made mandatory for form 706 to be filed by the executor of the estate of every US citizen or resident whose gross estate including adjusted taxable gifts and exemption is more than $2 million. The return has to be filed nine months from the date of death of the decedent unless the executor files for an extension using form 4768.
The IRS assumes that the decedent has kept detailed records of the value of every asset and debt at the time of his or her death. Income and deductions prior to date of death have to be reported using form 1040; and income and expenses of the decedent after the date of debt have to be reported using form 1041 until estate taxes and other estate settlements have been done.
It is the executor’s take to identify items of the estate that have to be passed directly to the beneficiary. This can include life insurance, annuities, IRA, retirement savings accounts and other assets. All this has to be mentioned in form 706. In addition, distribution of income is also part of the taxable estate along with any joint ownership of property and asset. Even gifts that were made during the time the decedent was alive have to be mentioned in the form along with their values. However, credits for any gift tax paid can be offset from the taxable estate.
If an executor is looking for instructions to fill up form 706, he or she should refer to the IRS website which contains comprehensive and detailed information about the filling and filing procedure of estate tax return.
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