IRS Form 706-GS(D) – IRS Forms, Instructions, Pubs 2026 – In the complex world of estate planning and taxation, the Generation-Skipping Transfer (GST) tax plays a crucial role in preventing tax avoidance across multiple generations. If you’ve received distributions from a trust that skip a generation, you may need to file IRS Form 706-GS(D). This comprehensive guide breaks down everything you need to know about Form 706-GS(D), including its purpose, filing requirements, and step-by-step instructions. Whether you’re a beneficiary, trustee, or tax professional, staying compliant with GST tax rules is essential to avoid penalties.
What Is the Generation-Skipping Transfer Tax?
The GST tax is a federal tax imposed on transfers of property that skip one or more generations, such as from grandparents to grandchildren. It’s designed to ensure that estate taxes aren’t evaded by bypassing the middle generation. The tax applies to distributions from trusts where the beneficiary is considered a “skip person”—typically someone two or more generations below the transferor.
The current GST tax rate is 40% for transfers occurring after December 31, 2012. This rate has remained stable since the American Taxpayer Relief Act of 2012, with no changes announced as of early 2026. The tax is calculated based on the taxable amount of the distribution, adjusted for any allowable expenses.
Purpose of IRS Form 706-GS(D)
Form 706-GS(D), officially titled “Generation-Skipping Transfer Tax Return for Distributions,” is used by skip person distributees to calculate and report the GST tax due on taxable distributions from a trust. This form must be filed if you receive a taxable distribution with an inclusion ratio greater than zero, as reported on Form 706-GS(D-1) provided by the trustee.
The form helps the IRS track and collect taxes on these intergenerational transfers. It’s revised periodically; the latest version (Rev. December 2025) applies to distributions made after December 31, 2024. Always use the most current form to ensure accuracy.
Who Must File Form 706-GS(D)?
Any skip person who receives a taxable distribution from a trust is required to file Form 706-GS(D). A skip person is generally a beneficiary who is at least two generations below the transferor. This includes:
- Individuals (using their Social Security Number on the form).
- Trusts (using their Taxpayer Identification Number).
Trustees must first notify distributees using Form 706-GS(D-1), which details the distributions and inclusion ratios. If the inclusion ratio on Form 706-GS(D-1) is zero for all distributions, no filing is needed. However, if any distribution has a positive inclusion ratio, attach copies of all relevant Form 706-GS(D-1)s to your return.
If the distributee is a minor or under a disability, a parent, guardian, or authorized representative may file on their behalf.
When and Where to File Form 706-GS(D)
Filing is based on the calendar year, regardless of your personal tax accounting period. Key deadlines include:
- Filing Period: Submit on or after January 1 but no later than April 15 of the year following the distribution year. For example, for 2025 distributions, file by April 15, 2026.
- Extensions: Request an automatic 6-month extension using Form 7004, filed by the original due date. No explanation is required.
Mail the form to:
- Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999 (via U.S. Postal Service).
- Internal Revenue Submission Processing Center, 333 W. Pershing, Kansas City, MO 64108 (via private delivery services like FedEx or UPS).
For supplemental returns (e.g., to correct errors), note “Supplemental Information” on the form and mail to Internal Revenue Service Center, Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915.
How to Complete Form 706-GS(D): Step-by-Step Instructions?
The form is divided into three parts. Complete Part III first, then Part II, and finally Part I.
Part I: General Information
- Line 1a: Enter the name of the skip person distributee (individual or trust).
- Line 1b/1c: Provide the SSN (for individuals) or TIN (for trusts)—use only one.
- Line 2a: If filing on behalf of the distributee, enter the filer’s name and title.
- Lines 2b–2i: Provide the mailing address for IRS correspondence.
Part II: Tax Computation
- Line 3: Total transfers from Part III, line 11, column (c).
- Line 4: Deduct adjusted allowable expenses (e.g., preparation fees prorated by inclusion ratio). Expenses must be ascertainable; claim refunds later via Form 843 if needed.
- Line 5: Taxable amount (Line 3 minus Line 4).
- Line 6: Enter the applicable GST tax rate (40% for post-2012 transfers).
- Line 7: GST tax due (Line 5 × Line 6).
- Line 8: Any payments made with Form 7004.
- Line 9: Tax due if Line 7 > Line 8.
- Line 10: Overpayment details, including bank info for direct deposit.
Use the following table for historical tax rates (though 40% applies to recent years):
| Transfer Date | Maximum Tax Rate |
|---|---|
| After Dec 31, 2012 | 40% |
| Jan 1, 2011 – Dec 31, 2012 | 35% |
| Jan 1, 2010 – Dec 31, 2010 | 0% |
| Jan 1, 2007 – Dec 31, 2009 | 45% |
| (Earlier periods vary; see instructions for details) |
Part III: Distributions
List all taxable distributions with inclusion ratios > 0. Reference details from Form 706-GS(D-1):
- Column (a): Trust TIN.
- Column (b): Item number from Form 706-GS(D-1).
- Column (c): Amount of transfer. Use continuation sheets if needed.
Sign the form (distributee or representative) and include paid preparer info if applicable.
Penalties and Interest for Non-Compliance
Late filing or payment incurs penalties under Section 6651, unless reasonable cause is shown. Underpayments due to negligence or valuation understatements may trigger a 20% penalty under Section 6662. Interest accrues on unpaid taxes from the due date.
Return preparers face penalties for understatements: $1,000+ for unreasonable positions or $5,000+ for willful conduct. To request reasonable cause relief, respond to IRS notices—don’t attach explanations to the initial return.
Recent Updates and Changes for 2026 Filers
As of February 2026, the form remains unchanged from the December 2025 revision, applicable to 2025 distributions. Key ongoing features include electronic payment options via EFTPS, same-day wire, or checks payable to “United States Treasury.” Direct deposit for refunds is encouraged.
Monitor IRS.gov for any inflation adjustments or legislative changes affecting GST exemptions (currently $13.61 million for 2025, potentially adjusting in 2026).
Conclusion: Stay Compliant with GST Tax Filing
Filing IRS Form 706-GS(D) ensures you meet your obligations under the GST tax regime. By understanding who must file, key deadlines, and how to complete the form, you can avoid costly penalties. For personalized advice, consult a tax professional or estate attorney. Download the latest form and instructions from the IRS website to get started.
Remember, accurate reporting protects your legacy and complies with federal tax laws. If you have questions, visit IRS.gov or contact the IRS directly.