Part of dealing with the death of a family member is the need to file a federal (and, in many cases, state) estate tax return. Even those decedents whose total assets fall below estate and gift tax exemption thresholds are well advised to file Form 706, which must be submitted within 9 months of the date of death.
However, because many estates are tied up in probate or total assets cannot be properly assessed within a 9 month window, it is common practice for people to file for an extension using Form 4768. This extends the filing deadline an additional 6 months.
The IRS, acknowledging that many estate fall under the estate tax threshold, is making it easier for such estates to gain extra time to file Form 706.
Estates eligible for the simplified method under the new procedure (Rev. Proc. 2014-18) are those for which the decedent is a U.S. citizen or resident, the decedent died after 2010 and before 2014, the decedent is survived by a spouse, the estate was not required to file an estate tax return under section 6018(a) because the estate lacked sufficient assets, and the estate did not file a timely estate tax return. These qualifying estates have an automatic extension of time to file a timely estate tax return until the end of 2014. No user fee is imposed under the revenue procedure.
The IRS hopes this new, simplified extension process will help those who did not know they had to file an estate tax return as well as same-sex couples whose marriage lacked federal recognition when an estate tax return was due.
Estate and gift tax issues can be complicated, and you should always consult with a qualified tax accountant before making any decisions or filing for an extension. For additional information please contact the Gray, Gray & Gray Tax Department at (781) 407-0300.