Estate taxes are due nine months after someone dies, unless the estate requests an extension
The federal estate tax important date is nine months after the date of death. This is when the person handling the estate (called the executor or personal representative) must file Form 706, the federal estate tax return, with the IRS. The important date can be extended to 15 months after death if the executor files for an extension before the nine-month mark passes.
Most estates do not owe federal estate tax at all. The federal threshold is high — in 2024, only estates worth more than $13.61 million are subject to federal tax. However, some states have their own estate taxes with much lower thresholds, and those important date may differ from the federal important date. If you live in or the deceased lived in a state with an estate tax, that state's important date applies separately.
Even if no tax is owed, the executor may still need to file Form 706 to document the estate's value and preserve certain tax benefits for heirs. The IRS requires filing whenever the estate is above the threshold, regardless of whether tax is actually due.
Key Takeaways
- Federal estate tax returns are due nine months after death, with a possible extension to 15 months if requested before the important date.
- Federal estate tax only applies to estates worth more than $13.61 million in 2024, but state estate taxes may explore at lower amounts.
- The executor is responsible for filing the return and paying any tax owed from estate funds, not from the heirs' personal accounts.
- Some states have their own estate tax important date that run separately from the federal important date.
- Filing Form 706 may be required even if no tax is owed, to preserve tax benefits for heirs.
Who actually pays the estate tax
The executor or personal representative — the person named in the will or appointed by the court — is responsible for paying estate taxes. They pay from the estate's assets before distributing money or property to heirs. This means the heirs do not pay the tax from their own pockets; the estate pays it first, and heirs receive what remains.
If the estate does not have enough liquid assets (cash or things easily sold) to cover the tax bill, the executor may need to sell property, investments, or other assets belonging to the estate. Some estates take out loans against the estate's value to cover the tax while waiting for property to sell.
The executor can face penalties and interest if the tax is not paid by the important date, so it is important to file on time even if an extension is needed. The IRS charges interest on unpaid tax starting from the original nine-month important date, not from any extended important date.
State estate taxes have different important date and thresholds
Twelve states plus Washington, D.C., have their own estate taxes separate from the federal tax. These states are Connecticut, Delaware, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington, D.C. Each state sets its own threshold — the amount an estate must reach before tax is owed — and each has its own filing important date.
Some state important date match the federal nine-month important date, but others do not. For example, some states require filing within a specific number of months after death, while others tie the important date to when the federal return is filed. If the deceased lived in or owned property in a state with an estate tax, the executor must track that state's separate important date and file accordingly.
State estate tax thresholds are typically much lower than the federal threshold. Some states tax estates over $1 million, while others set the threshold at $5 million or $6 million. An estate might owe no federal tax but still owe state tax, or vice versa.
How to request an extension if you need more time
The executor can request a six-month extension of the federal important date by filing Form 4768 with the IRS before the original nine-month important date expires. This moves the important date from nine months to 15 months after death. The extension is usually granted automatically if requested on time; the IRS does not require a reason.
Extensions are common when the estate is complex, when property needs to be appraised, or when the executor is still gathering financial records. However, requesting an extension does not extend the time to pay the tax — interest and penalties begin accruing on any unpaid tax starting from the original nine-month important date, even if the return itself is filed later.
Some states also allow extensions, but the rules vary. An executor should check with a tax professional or the state tax authority to understand what extensions are available in that state and whether they must be requested separately from the federal extension.
What happens if the important date is missed
If the estate tax return is not filed by the important date and no extension was requested, the IRS charges a penalty of 5 percent per month (up to 25 percent total) on the unpaid tax. Interest also accrues at the current federal rate, compounded daily. These penalties and interest are added to the original tax bill, making the total debt grow quickly.
The executor can request a penalty waiver if there was reasonable cause for the delay — for example, if the executor was seriously ill, if key documents were lost, or if the executor relied on incorrect information from a professional. However, the IRS does not automatically waive penalties, and the burden is on the executor to explain why the important date was missed.
If the estate owes money to the IRS and the executor has already distributed assets to heirs, the executor may be personally liable for the unpaid tax. This is one reason why many executors work with a tax professional or attorney to may support important date are met.
How the estate value is determined for tax purposes
The estate's value is determined as of the date of death, using the fair market value of all assets the deceased owned. This includes real estate, bank accounts, investments, vehicles, business interests, and life insurance proceeds. The executor (or a professional appraiser) must determine what each asset was worth on the day the person died, not what it is worth months later when it is sold.
For real estate and other hard-to-value assets, the executor typically hires a professional appraiser. For stocks and bonds, the value is the closing price on the date of death. For bank accounts and cash, the value is straightforward the balance on that date.
Some assets are excluded from the taxable estate — for example, property left to a surviving spouse, property left to charity, and certain life insurance proceeds. The executor must account for these exclusions when calculating whether the estate is above the tax threshold.
Frequently Asked Questions
Do I have to pay estate tax if I inherit money?
No. Heirs do not pay federal estate tax on what they inherit. The estate pays the tax before distributing assets to heirs. However, if you inherit certain assets like retirement accounts or investment properties, you may owe income tax or capital gains tax later when you withdraw or sell them — that is different from estate tax.
What if the estate is below the tax threshold?
If the estate is below the federal threshold ($13.61 million in 2024), no federal estate tax is owed and Form 706 does not need to be filed. However, if the deceased lived in a state with an estate tax, that state's threshold applies separately. Some states require filing even for smaller estates to document the value and preserve tax benefits for heirs.
Can the executor pay estate tax in installments?
Yes, in some cases. If the estate includes a business or farm, the executor may be able to pay the tax in installments over up to 14 years. For other estates, the IRS may allow a payment plan if the executor requests one and shows financial hardship. However, interest and penalties continue to accrue on unpaid amounts.
What if the executor does not know the estate's value?
The executor must gather financial records, bank statements, property deeds, and investment statements to determine the estate's value. For assets without clear market values — like family businesses, art, or jewelry — the executor hires a professional appraiser. If records are missing, the executor works with the IRS to reconstruct the value using available evidence.
Does life insurance count toward the estate tax threshold?
Yes, life insurance proceeds are included in the taxable estate if the deceased owned the policy or had the right to change the beneficiary. However, if the policy is owned by an irrevocable trust or if the beneficiary is a trust set up correctly, the proceeds may be excluded. A tax professional can advise on whether life insurance affects the estate's tax liability.