IRS Instruction 706-QDT – IRS Forms, Instructions, Pubs 2026 – If you’re the trustee or designated filer for a Qualified Domestic Trust (QDOT), understanding IRS Form 706-QDT is essential for complying with U.S. estate tax rules. This form reports and pays estate taxes on specific distributions or the trust’s assets upon the surviving spouse’s death—particularly when the spouse is not a U.S. citizen.
The latest IRS Instructions for Form 706-QDT (revised August 2025) provide clear guidance on filing requirements, tax calculations, and recent updates like the redesigned form for better efficiency and electronic payments. This comprehensive guide breaks down everything you need to know, based directly on official IRS sources.
Download the official form and instructions here:
What Is Form 706-QDT and Who Needs to File It?
Form 706-QDT, titled “U.S. Estate Tax Return for Qualified Domestic Trusts,” is the IRS form used to calculate and report estate taxes due on a QDOT. A QDOT allows a non-U.S. citizen surviving spouse to qualify for the estate tax marital deduction, which can defer or reduce taxes on assets passing to them.
Key Purposes of Form 706-QDT
- Report estate tax on taxable distributions of trust corpus (principal) before the surviving spouse’s death (excluding income or hardship distributions).
- Report the value of remaining trust property on the surviving spouse’s death.
- Report the corpus portion of certain annuity payments.
- Notify the IRS when the trust is exempt from future filings (e.g., if the spouse becomes a U.S. citizen and meets specific conditions).
Who Must File?
- The trustee: Required if the surviving spouse benefits from only one QDOT. If multiple trustees exist, each is liable. For multiple QDOTs, file unless a designated filer is appointed.
- The designated filer: Appointed by the decedent’s executor (on the original estate tax return or first Form 706-QDT) when the spouse benefits from multiple QDOTs. This filer handles the consolidated return.
Trustees must complete a separate Schedule B for each trust and provide it to the designated filer at least 60 days before the due date.
Filing is required in any year with a taxable event or hardship distribution.
Key Definitions in IRS Form 706-QDT Instructions
Understanding these terms is crucial for accurate filing:
| Term | Definition |
|---|---|
| Qualified Domestic Trust (QDOT) | A trust qualifying for the marital deduction under IRC Section 2056, with requirements like a U.S. citizen or domestic corporation as trustee, withholding rights for QDOT tax, and a proper election on the decedent’s estate tax return. |
| Taxable Event | Includes corpus distributions (except income or hardship), the surviving spouse’s death, or the trust failing to qualify as a QDOT. |
| Hardship Distribution | Corpus distributions for immediate financial needs related to health, maintenance, education, or support of the spouse or dependents. |
| Decedent | The person whose estate made the QDOT election. |
| Surviving Spouse | The non-U.S. citizen beneficiary (includes same-sex spouses per Rev. Rul. 2013-17). |
When and Where to File Form 706-QDT?
Form 706-QDT is an annual return, but deadlines vary:
- For taxable distributions or hardship distributions: Due April 15 of the year following the calendar year of the event.
- Due to surviving spouse’s death: Within 9 months of death (includes all distributions that year). Example: Death on June 14, 2025 → Due March 14, 2026.
- If trust ceases to qualify as QDOT: Within 9 months of the cessation date.
Extensions: Use Form 4768 for an automatic 6-month extension to file (but not to pay the tax).
Where to File:
- Mail to: Internal Revenue Service Center, Kansas City, MO 64999.
- For Private Delivery Services (PDS): Use 333 W. Pershing, Kansas City, MO 64108.
Payments: Due at filing. Use EFTPS for electronic payments. Elect installment payments under Section 6166 if the estate qualifies (attach statements).
Recent Updates in 2025 Instructions for Form 706-QDT
The August 2025 revision includes important changes:
- Redesigned form: Streamlined for efficiency for taxpayers and the IRS.
- Electronic payments encouraged: New direct deposit options for refunds (lines 15b–d).
- Security requirements clarified: For QDOTs over $2 million in assets, stricter trustee, bond, or letter of credit rules apply. Personal residence exclusion up to $600,000 is available.
- No major tax rate changes: Use the table in instructions for recomputing taxes based on decedent’s death year (e.g., 40% maximum for deaths after 2012).
Step-by-Step Guide to Completing Form 706-QDT
Follow this order based on your role:
For Trustees Filing the Full Return
- Part I – General Information: Enter trustee/designated filer details, surviving spouse’s TIN, and decedent’s information.
- Part II – Elections: Check boxes for alternate valuation (Section 2032), special use valuation (Section 2032A), installment payments (Section 6166), or spousal election (if spouse is now a U.S. citizen).
- Schedule B (Per Trust): Detail taxable distributions (Part II), property at death (Part III), and any marital/charitable deductions (Parts IV–V).
- Schedule A: Summarize totals from all Schedule Bs.
- Part III – Tax Computation: Recompute the decedent’s estate tax including QDOT amounts. Pay any tax due.
For Designated Filers
Receive completed Schedule Bs from each trustee, summarize on Schedule A, and complete the rest of the form.
Attachments:
- First filing: Copy of trust instrument.
- Death-related filing: Death certificate.
Rounding: Use whole dollars only.
Tax Computation and Payments on Form 706-QDT
The estate tax is recomputed using the decedent’s taxable estate from the original Form 706 or 706-NA, adjusted for QDOT distributions or assets.
- Apply the highest applicable rate if multiple QDOTs lack a designated filer.
- Claim credits like foreign death taxes (attach Schedule P).
- Penalties: Late filing/payment (up to 25% under Section 6651), accuracy-related (20–40% under Section 6662).
Security Rules:
- Over $2M assets: U.S. bank trustee, 65% bond, or letter of credit.
- $2M or less: Limit foreign real property to 35% or meet higher standards.
Common Questions About Form 706-QDT
Can I file electronically?
Currently, paper filing is required, but electronic payments are strongly encouraged.
What if the surviving spouse becomes a U.S. citizen?
You may file a final return and elect exemption from future filings if no prior QDOT tax was imposed and other conditions are met.
Need help?
Consult a qualified estate tax professional or attorney. For questions, contact the IRS at the address on the form or check IRS.gov/Form706QDT for updates.
Stay Compliant with IRS Form 706-QDT
Navigating IRS Instructions for Form 706-QDT ensures your Qualified Domestic Trust meets all requirements and avoids costly penalties. Always use the latest version from IRS.gov, as rules can change with legislation.
For the most current information, visit the official IRS page for Form 706-QDT.
This guide is for informational purposes only and is not tax advice. Tax laws are complex—professional guidance is recommended.