What Is Estate Tax and How to File Form 706 | A Complete Guide by Z-Tax & Accounting

Understanding Estate Tax

Estate tax—often called the “death tax”—is a federal tax imposed on the transfer of a deceased person’s estate to their heirs or beneficiaries. It applies to the total value of the estate, including cash, investments, real estate, business interests, and personal property.

At Z Tax and Accounting in Irving, TX, we help individuals, families, and executors navigate the complex estate tax filing process, including preparing and filing IRS Form 706 accurately and on time.

What Is Estate Tax?

The federal estate tax is assessed on the fair market value of a deceased person’s assets at the time of death. However, not all estates are subject to estate tax.

For 2025, the federal estate tax exemption is $13.61 million per individual (or $27.22 million for married couples). Estates valued below this amount are not required to pay federal estate tax.

Any amount above the exemption is taxed at rates ranging from 18% to 40%.

Example:

If a person passes away in 2025 leaving an estate worth $15 million, only the amount above $13.61 million ($1.39 million) would be subject to estate tax.

What Is Form 706?

IRS Form 706, officially titled the United States Estate (and Generation-Skipping Transfer) Tax Return, is used to:

• Report the value of the deceased person’s estate,
  
  

• Calculate the amount of estate tax due, and
  
  

• Claim any applicable credits or deductions.
  
  

This form must generally be filed by the executor or personal representative of the estate if the total value exceeds the federal exemption threshold.

When to File Form 706

Form 706 must be filed within nine months of the date of death. Executors may request a six-month extension using Form 4768, but payment of any tax owed is still due within the original nine-month period.

Timely and accurate filing is crucial to avoid penalties, interest, or legal complications during the estate settlement process.

Z Tax and Accounting assists executors and families throughout Irving, Dallas, and the greater DFW area and beyond, including other states with estate tax compliance, ensuring deadlines and reporting requirements are fully met.

Common Deductions and Credits

When preparing Form 706, several deductions and credits can help reduce estate tax liability, including:

• Marital deduction: Transfers to a surviving spouse are tax-free.
  
  

• Charitable deduction: Gifts to qualifying charities reduce taxable estate value.
  
  

• Administrative and funeral expenses: Reasonable costs can be deducted.
  
  

• Debts and mortgages: Outstanding obligations lower the taxable value.
  
  

Our team at Z Tax and Accounting identifies all eligible deductions to minimize your estate’s tax burden.

Federal vs. State Estate Taxes

While Texas does not impose a separate state estate or inheritance tax, some other states do. However, if the deceased owned property or business assets in another state, multi-state estate tax filings may be required.

Z Tax and Accounting provides guidance for complex estate situations involving multiple states or high-value assets.

Why Professional Help Matters

Filing Form 706 is one of the most complex IRS processes — even small mistakes can cause costly delays or tax overpayments. Working with experienced professionals ensures:

• Accurate estate valuation and documentation
  
  

• Timely filing with the IRS
  
  

• Proper use of available credits and deductions
  
  

• Reduced tax liability for heirs and beneficiaries
  
  

At Z Tax and Accounting, we work closely with attorneys, financial advisors, and families to ensure smooth estate administration and full compliance with federal tax laws.

Estate Tax and Accounting Services in Irving, TX

Z Tax and Accounting provides comprehensive estate tax and accounting services for clients across Irving, Las Colinas, and the Dallas-Fort Worth area, including:

• IRS Form 706 preparation and filing
  
  

• Estate and trust accounting
  
  

• Estate planning consultation
  
  

• Coordination with probate attorneys
  
  

• IRS representation and compliance review
  
  

Whether you’re managing a large estate or seeking advice for future planning, our team is here to provide clear, professional support.

Final Thoughts

Estate taxes can be complicated, but with expert guidance, they don’t have to be overwhelming. Proper planning and accurate filing of Form 706 can help preserve wealth, protect your beneficiaries, and ensure a seamless estate transfer process.

Trust Z Tax and Accounting in Irving, TX to guide you through every step of estate tax preparation and compliance.

📍 Contact Z Tax and Accounting

Z Tax and Accounting
600 E John Carpenter Freeway, Suite 268
Irving, TX 75062
📞 Call: (214) 699-4790

Z Tax and Accounting — Your Trusted Estate Tax and Accounting Professionals in Irving, Texas.