When someone dies, the executor of their estate -- the person chosen to wrap up the deceased person's affairs -- must handle the taxes. If the estate is large enough that includes filing estate taxes. Few executors have to file because the tax only applies to estates worth at least $5.34 million at the time of publication. The Internal Revenue Service (IRS) may grant you an extension under certain circumstances if you have to file.
Beat the Clock
Under normal circumstances you have nine months after the deceased passes on to deliver the estate-tax return -- Form 706 -- to the IRS. If you can't make the deadline, file an extension request as soon as you can. Use Form 4768 to give yourself an extra six months. You don't need a reason. If you submit the form ahead of time the extension is automatic. Unfortunately, you still have to pay the estate's tax bill before the original nine-month deadline expires.
Far, Far Away
If six months isn't enough, the IRS allows you to push back the deadline a second time if you're out of the country. File Form 4768 again to ask for a delay until you get home. Even if you know you're going to be out of the country, the IRS says you should apply for the automatic extension first. Before that runs out, file a second form for the travel extension and you should be fine.
If you don't file Form 4768 in time to get the automatic extension, you can request a retroactive extension. To do this, file a 4768 and attach an explanation for why you didn't file sooner. A common reason executors give for missing the deadline is bad legal advice. For example, your attorney may incorrectly say that you don't need to file, or fail to notify you of the deadline. Keep in mind this extension request isn't automatic as the IRS can refuse to grant you additional time.
Time to Pay
You can extend the deadline for paying the tax, but that's a separate filing. Though the maximum extension is one year, you may be able to re-extend up to a total of 10 years. If, say, some of the estate's value is based on royalties or patent payments due in the future, you may not have the cash in the estate to pay the bills. That would be a valid reason to delay payment. So would having to fight someone in court to get assets belonging to the estate.
- Nolo: Estate Tax -- Will Your Estate Have to Pay?
- Internal Revenue Service: Survivors, Executors and Administrators
- Internal Revenue Service: Instructions for Form 4768
- Federal Tax Procedure: Estate Did Not Have Reasonable Cause For Failure to Timely File Estate Tax Return
- IRS. "Filing and Payment Deadline Extended to July 15, 2020 - Updated Statement." Accessed April 16, 2020.
- IRS. "Common Penalties for Individuals." Accessed April 16, 2020.
- IRS. "Topic No. 304 Extensions of Time to File Your Tax Return." Accessed April 16, 2020.
- IRS. "Need an Extension of Time to File Taxes?" Accessed April 16, 2020.
- IRS. "Free File: Do Your Federal Taxes for Free." Accessed April 16, 2020.
- IRS. "Free File: Everyone Can File an Extension for Free." Accessed April 16, 2020.
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.