Introduction to Portability on Form 706
The portability of the deceased spousal unused exclusion amount (DSUE) allows a surviving spouse to claim the unused portion of their deceased spouse's estate tax exemption. To elect portability, the executor of the deceased spouse's estate must file Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, with the IRS.
The portability election is an important consideration for married couples, as it can provide significant tax savings for the surviving spouse. However, the election must be made in a timely manner, and the executor must follow the proper procedures to ensure that the election is valid.
Eligibility for Portability on Form 706
To be eligible for the portability election, the deceased spouse must have been a U.S. citizen or resident at the time of their death. Additionally, the executor of the deceased spouse's estate must file Form 706, even if the estate is not otherwise required to file an estate tax return.
The executor must also make the portability election on a timely filed Form 706, which is typically due within nine months of the deceased spouse's date of death. If the executor fails to make the election, the surviving spouse may be unable to claim the unused portion of the deceased spouse's estate tax exemption.
How to Elect Portability on Form 706
To elect portability on Form 706, the executor must complete Part 6, Section A, of the form. This section requires the executor to provide information about the deceased spouse's estate, including the value of the gross estate and the amount of the deceased spousal unused exclusion amount.
The executor must also sign and date the form, and attach any required documentation, such as a copy of the deceased spouse's death certificate. It is recommended that the executor consult with a tax professional or attorney to ensure that the portability election is made correctly.
Consequences of Electing Portability on Form 706
If the executor elects portability on Form 706, the surviving spouse may be able to claim the unused portion of the deceased spouse's estate tax exemption. This can provide significant tax savings for the surviving spouse, as it can reduce or eliminate the amount of estate tax owed.
However, the portability election may also have implications for the surviving spouse's own estate tax exemption. For example, if the surviving spouse claims the unused portion of the deceased spouse's exemption, they may be required to file an estate tax return and pay any applicable taxes when they pass away.
Common Mistakes to Avoid When Electing Portability on Form 706
One common mistake that executors make when electing portability on Form 706 is failing to file the form on time. The portability election must be made on a timely filed Form 706, which is typically due within nine months of the deceased spouse's date of death.
Another mistake is failing to provide complete and accurate information on the form. The executor must provide all required information, including the value of the gross estate and the amount of the deceased spousal unused exclusion amount, to ensure that the portability election is valid.
Frequently Asked Questions
What is the deadline for filing Form 706 to elect portability?
The deadline for filing Form 706 to elect portability is typically within nine months of the deceased spouse's date of death.
Can the portability election be made on an amended Form 706?
Yes, the portability election can be made on an amended Form 706, but it must be filed within the applicable time period.
What is the purpose of the portability election on Form 706?
The purpose of the portability election is to allow the surviving spouse to claim the unused portion of the deceased spouse's estate tax exemption.
Do I need to file Form 706 if the estate is not otherwise required to file an estate tax return?
Yes, if you want to elect portability, you must file Form 706, even if the estate is not otherwise required to file an estate tax return.
Can I claim the portability exemption if I remarried after my spouse's death?
Yes, you can claim the portability exemption even if you remarried after your spouse's death, but you must meet certain requirements.
How do I calculate the deceased spousal unused exclusion amount on Form 706?
You can calculate the deceased spousal unused exclusion amount by completing the applicable sections of Form 706 and following the instructions provided.