Can you make a late portability election?

There may be a window for some to file a late, but still timely, estate tax return to make the portability election. The due date for filing an estate tax return is nine months after the date of death, with an automatic six month extension if requested by the nine month due date.

Is estate portability permanent?

Second, it made Portability permanent. Portability allows a surviving spouse the ability to transfer the deceased spouse’s unused exemption amount (DSUEA) for estate and gifts taxes to a surviving spouse, so long as the Portability election is made on a timely filed federal estate tax return (IRS Form 706).

Will portability go away?

When President Obama signed the American Taxpayer Relief Act (ATRA) into law back in 2013, this law made the portability feature permanent in the way that it does not need to be renewed. In fact, Congress must take active steps to overturn it in order for it to go away.

Does portability of the estate tax exemption occur automatically?

Importantly, portability is not automatic. In order for the surviving spouse to pick up and use the unused exemption of the deceased spouse, the deceased spouse’s estate has to file a federal estate tax return that makes an election to allow the surviving spouse to use that exemption.

When Must Form 706 be filed electing portability?

Normally, Form 706 is due nine months from the date of death with a six month automatic extension available. However, if the 706 is filed only to elect portability, it can be filed anytime on or before the second anniversary of decedent’s death.

When must portability election be made?

The portability election must be made within nine (9) months of the first spouse’s passing, although the executor may file for an extension before the due date.

Who should elect portability?

The election to transfer a DSUE amount to a surviving spouse is known as the portability election. An estate tax return may need to be filed for a decedent who was a nonresident and not a U.S. citizen if the decedent had U.S.-situated assets.

How does the portability election work?

Portability allows a surviving spouse to apply a deceased spouse’s unused federal gift and estate tax exemption amount toward his or her own transfers during life or at death. To secure these benefits, however, the deceased spouse’s executor must have made a portability election on a timely filed estate tax return.

What is the 2022 gift tax exclusion?

Annual Gift Exclusion Like we’ve mentioned before, the annual exclusion limit (the cap on tax-free gifts) is a whopping $16,000 per person per year for 2022 (it’s $15,000 for gifts made in 20212). So even if you do give outrageously, you wouldn’t have to file a gift tax return unless you went over those limits.

How do I claim DSUE?

In order to elect portability of the decedent’s unused exclusion amount (deceased spousal unused exclusion (DSUE) amount) for the benefit of the surviving spouse, the estate’s representative must file an estate tax return (Form 706) and the return must be filed timely.

How do I extend my Form 706?

Use Form 4768 to:

1. Apply for an automatic 6-month extension of time to file Form 706, Form 706-A, Form 706-NA, or Form 706-QDT.
2. Apply for a discretionary (additional) extension of time to file Form 706 (Part II of Form 4768).
3. Apply for a discretionary (for cause) extension of time to file Form 706.

Who elects portability?

Should portability of federal estate tax exemptions remain permanent?

Portability should remain a permanent part of federal estate tax law going forward unless Congress takes step to repeal this provision. Thanks to ATRA, it no longer has to be renewed to remain in effect. The Tax Cuts and Jobs Act (TCJA) effectively doubled the federal estate tax exemption in 2018. It was $5.49 million in 2017.

When to make a portability election for an estate?

Note: On February 17, 2012, the IRS released Notice 2012-21, which provides that for certain estates, the portability election can be made within 15 months after the date of death even if the surviving spouse failed to timely file a Form 4768. What Is the Future of Portability of the Estate Tax Exemption?

What is estate tax portability and how does it work?

It is transferred to the surviving spouse to reduce the overall estate tax once the second spouse passes away. Thanks to portability, the surviving spouse can use the deceased spouse’s unused estate tax exemption and add it to their own when the surviving spouse passes away. Portability is a federal exemption.

Is there an extension of time to elect portability available?

If the filing threshold has been met, or in other words, if, independent of the portability election, the estate is required to file an estate tax return based on the total value of the gross estate and adjusted taxable gifts, no extension of time to elect portability is available and Revenue Procedure 2017-34 (PDF) does not apply.