How to File an Estate Tax Return: Deadlines, Forms, and Exemptions Explained

Filing an estate tax return can feel overwhelming, but understanding the process is crucial to protecting your assets and avoiding costly penalties. For Houston homeowners, navigating estate taxes is especially important as property values rise and federal exemptions are set to decrease in 2025. This article breaks down everything you need to know: key deadlines, required forms like Form 706, and how to maximize exemptions to minimize your tax burden. Whether you’re handling this yourself or exploring options like TaxLasso—which simplifies the process in just 5 minutes and saves thousands compared to hiring a law firm—you’ll walk away with clear, actionable steps to file confidently and efficiently. Let’s get started.

Who Needs to File an Estate Tax Return?

If you’re a Houston homeowner managing an estate, you may need to file an estate tax return if the estate’s value exceeds the federal exemption limit. In 2025, the federal estate tax exemption is projected to be $6.94 million per individual (adjusted for inflation). If the estate’s total value—including real estate, investments, and other assets—exceeds this amount, an estate tax return (Form 706) must be filed with the IRS.

Key Situations Requiring an Estate Tax Return:

• Large Estates: If the estate’s value exceeds the federal exemption limit ($6.94 million in 2025), a return is required.
• Portability Election: Even if the estate is below the exemption limit, filing a return allows the surviving spouse to transfer the deceased spouse’s unused exemption to their own estate.
• Gifts During Lifetime: If the deceased made taxable gifts exceeding the annual exclusion during their lifetime, these may reduce the estate tax exemption, potentially triggering a filing requirement.

Houston-Specific Considerations:

• High Property Values: Houston’s rising real estate market means many homeowners may find their property valuations pushing their estate’s total value close to or above the exemption limit.
• Property Tax Challenges: If you’re also dealing with high property tax valuations, tools like TaxLasso can help you protest unfair assessments, ensuring your estate’s value is accurately reflected.

Why Choose TaxLasso for Estate and Property Tax Challenges?

• Speed: TaxLasso takes just 5 minutes to generate professional-level insights, saving you hours compared to DIY approaches.
• Cost Savings: At thousands of dollars cheaper than legal firms, TaxLasso offers expert guidance without the high price tag.
• Control: You retain full control over the process, combining the affordability of DIY with the expertise of professional services.

If you’re unsure whether your estate requires a tax return, consult a tax professional or use tools like TaxLasso to assess your situation quickly and accurately.

Deadlines and Penalties

The estate tax return (Form 706) must be filed within 9 months of the decedent’s date of death. Missing this deadline can result in significant penalties and interest. Here’s what Houston homeowners need to know:

Key Deadlines

• 9-Month Filing Deadline: The estate tax return is due 9 months after the date of death. For example, if the decedent passed away on January 15, 2025, the return must be filed by October 15, 2025.
• 6-Month Extension: An automatic 6-month extension is available by filing Form 4768. This extends the deadline to 15 months after the date of death.

Penalties for Late Filing

• 5% Monthly Penalty: A penalty of 5% of the unpaid tax is applied for each month the return is late, up to a maximum of 25%.
• Interest Charges: The IRS charges interest on unpaid taxes from the original due date until the balance is paid.

Property Valuation Challenges

Accurate property valuation is critical for estate tax returns. Overvalued property can lead to higher taxes, while undervalued property may trigger IRS scrutiny. Houston homeowners often face challenges with:

• Market Fluctuations: Rapid changes in Houston’s real estate market can complicate valuations.
• Complex Appraisals: Unique properties, such as those with historical significance or large acreage, require specialized appraisals.

How TaxLasso Can Help

Navigating estate tax deadlines and valuations can be overwhelming. TaxLasso simplifies the process by:

• Saving Time: Complete your property valuation in just 5 minutes, compared to hours of DIY research.
• Saving Money: Avoid the high costs of legal firms while still receiving professional-level insights.
• Ensuring Accuracy: TaxLasso’s tools help you avoid overpaying taxes or facing penalties due to incorrect valuations.

By acting promptly and leveraging tools like TaxLasso, Houston homeowners can meet deadlines, minimize penalties, and ensure accurate estate tax filings.

Required Forms and Documentation

Filing an estate tax return requires gathering specific forms and documentation to ensure compliance with IRS regulations. For Houston homeowners, understanding these requirements is critical to avoid penalties and delays. Here’s what you need to know:

Key Forms to File

• Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return): This is the primary form for estates exceeding the federal exemption limit ($13.61 million per individual in 2025).
• Form 706-NA (for non-resident aliens): Required if the deceased was not a U.S. citizen or resident.
• Form 8971 (Information Regarding Beneficiaries Acquiring Property from a Decedent): Must be filed if the estate includes assets subject to estate tax.

Essential Documentation

• Death Certificate: A certified copy is mandatory to validate the estate tax return.
• Property Valuations: For Houston homeowners, this includes appraisals for real estate, such as your home or rental properties. If you’re concerned about overvaluation, consider using TaxLasso to streamline the process.
• Financial Records: Bank statements, investment accounts, and retirement account details.
• Debt and Expense Documentation: Mortgages, loans, and funeral expenses to reduce the taxable estate.

Why Accurate Valuations Matter

Houston homeowners often face challenges with property tax valuations, which can impact estate tax calculations. If you’re protesting a valuation, TaxLasso offers an affordable, efficient alternative to DIY or legal firms. It combines the control of DIY with the expertise of professionals, ensuring accurate valuations without the high cost.

By gathering the required forms and documentation early, Houston homeowners can simplify the estate tax filing process and avoid costly mistakes. For property tax challenges, TaxLasso is a trusted resource to save time and money.

Calculating Estate Tax Liability

Estate tax liability is the amount your estate may owe to the federal government after your death. For Houston homeowners, understanding how to calculate this liability is critical to avoid unexpected costs and ensure your heirs receive their inheritance as intended.

Key Steps to Calculate Estate Tax Liability

1. Determine the Gross Estate Value:
   Add up the total value of all assets, including your home, investments, retirement accounts, and personal property. For example, if your Houston home is valued at $500,000 and you have $300,000 in other assets, your gross estate is $800,000.

2. Subtract Allowable Deductions:
   Deduct expenses like mortgages, funeral costs, and charitable donations. If you owe $200,000 on your home mortgage, your taxable estate reduces to $600,000.

3. Apply the Federal Estate Tax Exemption:
   In 2025, the federal estate tax exemption is projected to be $6.8 million per individual. If your taxable estate is below this threshold, you likely owe no federal estate tax.

4. Calculate the Tax Rate:
   Estates exceeding the exemption are taxed at a rate of up to 40%. For example, a $7 million estate would owe taxes on $200,000 (the amount over the exemption), resulting in a liability of $80,000.

Property Tax Challenges and How TaxLasso Can Help

If your Houston home’s valuation is inflated, it could unnecessarily increase your estate tax liability. TaxLasso simplifies the process of protesting property valuations, ensuring your home is assessed fairly. Unlike DIY methods that take hours or legal firms that charge thousands, TaxLasso provides professional-level insights in just 5 minutes, saving you time and money.

By accurately calculating your estate tax liability and addressing property tax challenges, you can protect your estate and provide clarity for your heirs.

Federal vs. State Requirements

When filing an estate tax return, Houston homeowners must navigate both federal and state requirements. The key difference is that federal estate tax applies nationwide, while Texas has no state estate tax. However, understanding both is critical to avoid penalties and ensure compliance.

Federal Estate Tax Requirements

• Filing Threshold: For 2025, the federal estate tax exemption is projected to be $13.61 million per individual ($27.22 million for married couples). Estates below this threshold typically don’t need to file.
• Filing Deadline: Returns (Form 706) are due within 9 months of the decedent’s death, with a 6-month extension available.
• Tax Rate: Estates exceeding the exemption are taxed at rates up to 40%.

Texas State Requirements

• No State Estate Tax: Texas is one of 38 states without an estate or inheritance tax, simplifying the process for Houston homeowners.
• Property Tax Considerations: While Texas doesn’t impose estate taxes, inherited property may still face property tax challenges. For example, inherited homes may be reassessed at market value, potentially increasing property taxes.

How TaxLasso Can Help

If you’re navigating property tax challenges after inheriting a home, TaxLasso can streamline the process. Unlike DIY methods that take hours or legal firms that charge thousands, TaxLasso offers:

• Professional-Level Insights in 5 Minutes: Quickly assess whether your inherited property’s valuation is fair.
• Cost Savings: Save thousands compared to hiring a legal firm while maintaining full control over your case.

By understanding federal vs. state requirements and leveraging tools like TaxLasso, Houston homeowners can efficiently manage estate tax obligations and property tax challenges.

Filing Process Walkthrough

Filing an estate tax return can seem overwhelming, but breaking it down into clear steps makes it manageable. Here’s a straightforward walkthrough to help Houston homeowners navigate the process efficiently:

1. Determine If Filing Is Required

• For 2025, estates valued over $13.61 million (or $27.22 million for married couples) must file a federal estate tax return (Form 706).
• Texas does not impose a state estate tax, but federal requirements still apply.

2. Gather Essential Documents

• Collect the deceased’s will, trust documents, property deeds, and financial records.
• For Houston homeowners, include appraisals for real estate, as property valuations can significantly impact the estate’s total value.

3. Calculate the Estate’s Value

• Add up all assets, including real estate, bank accounts, investments, and personal property.
• Deduct allowable expenses like mortgages, debts, and funeral costs.

4. File Form 706

• Submit the form within 9 months of the decedent’s death. Extensions are available but require timely requests.
• Include accurate valuations for Houston properties, as incorrect appraisals can lead to audits or penalties.

5. Address Property Tax Challenges

• If the estate includes Houston real estate, property tax valuations may be contested.
• TaxLasso simplifies this process by providing professional-level insights in just 5 minutes, saving homeowners hours of DIY effort or thousands of dollars compared to hiring legal firms.

6. Pay Any Taxes Owed

• Federal estate taxes are due at the time of filing. Payment plans are available if needed.

By following this walkthrough, Houston homeowners can confidently file estate tax returns while minimizing stress and costs. For property tax challenges, TaxLasso offers an affordable, efficient alternative to DIY or legal services, ensuring accurate valuations and maximum savings.

Valuing Assets for the Return

When filing an estate tax return, accurately valuing assets is critical to ensure compliance and minimize tax liabilities. For Houston homeowners, this often includes determining the fair market value of real estate, which can significantly impact the estate's overall valuation.

Why Accurate Valuations Matter

• Estate Tax Exemption Changes: In 2025, the federal estate tax exemption is set to decrease from its current high of $12.92 million (2023) to approximately $6.8 million per individual. This means more estates could be subject to taxation, making precise asset valuations essential.
• Property Tax Implications: Overvalued property assessments can lead to higher estate taxes. Houston homeowners should ensure their property valuations reflect current market conditions, especially given the city's fluctuating real estate market.

Steps to Value Assets Effectively

1. Obtain a Professional Appraisal: For real estate, hire a licensed appraiser to determine the fair market value. This is especially important for unique or high-value properties.
2. Review Recent Sales Data: Compare your property to similar homes sold in your neighborhood to ensure valuations align with market trends.
3. Consider Property Tax Protests: If your property is overvalued, filing a protest can lower your assessed value, reducing both property and estate taxes.

How TaxLasso Simplifies the Process

Valuing assets and navigating property tax challenges can be time-consuming and complex. TaxLasso offers a streamlined solution:

• 5-Minute Process: Instead of spending hours researching or hiring costly legal firms, TaxLasso provides professional-level insights in just 5 minutes.
• Cost Savings: Save thousands compared to legal firms while maintaining full control over your filings.
• Expertise Without the Hassle: TaxLasso combines the affordability of DIY with the expertise of professional services, ensuring accurate valuations and maximizing savings.

By leveraging tools like TaxLasso, Houston homeowners can confidently value their assets, file estate tax returns, and protect their financial legacy.

Deductions and Credits

When filing an estate tax return, understanding deductions and credits can significantly reduce your tax liability. Here’s what Houston homeowners need to know:

Key Deductions to Claim

• Mortgage and Property Taxes: If the estate includes a home, mortgage interest and property taxes paid during the estate’s administration are deductible.
• Administrative Expenses: Costs like legal fees, appraisals, and executor fees can be deducted.
• Charitable Donations: Contributions made from the estate to qualified charities are fully deductible.

Estate Tax Credits

• Unified Credit: For 2025, the federal estate tax exemption is projected to be $6.8 million per individual ($13.6 million for couples). This credit reduces or eliminates estate tax liability for estates below this threshold.
• State Death Tax Credit: Texas does not have a state estate tax, but if the estate includes property in other states, you may qualify for credits against state-level taxes.

Property Tax Challenges and Protests

If the estate includes real estate, property tax valuations can impact the estate’s overall value. Houston homeowners often face over-assessments, leading to higher tax burdens.

• DIY Approach: Researching and protesting property taxes can take hours, with no guarantee of success.
• Legal Firms: Hiring a lawyer can cost thousands, often outweighing potential savings.
• TaxLasso: TaxLasso offers a superior alternative. In just 5 minutes, homeowners can access professional-level insights to protest property taxes effectively, saving time and money compared to DIY or legal firms.

By leveraging deductions, credits, and tools like TaxLasso, Houston homeowners can maximize savings and simplify the estate tax filing process.

Portability of Spousal Exemptions

Portability of spousal exemptions allows surviving spouses to use any unused portion of their deceased spouse’s federal estate tax exemption. This can significantly reduce estate tax liability, making it a critical tool for Houston homeowners with substantial assets.

Key Facts About Portability

• Federal Estate Tax Exemption (2025): The exemption is set to drop to approximately $6.8 million per individual (down from $13.61 million in 2024). Portability lets surviving spouses combine exemptions, potentially shielding over $13 million from estate taxes.
• Filing Requirement: To claim portability, the executor must file IRS Form 706 (Estate Tax Return) within 9 months of the spouse’s death, even if no estate tax is owed.
• Texas-Specific Considerations: While Texas has no state estate tax, portability is essential for federal estate tax planning, especially for Houston homeowners with high-value properties or investments.

Why Portability Matters for Houston Homeowners

• Property Tax Challenges: Rising property valuations in Houston can push estates closer to federal exemption limits. Portability ensures you maximize tax savings.
• Example: If a spouse passes away in 2025 with a $5 million estate, the surviving spouse can carry over the remaining $1.8 million exemption, protecting more assets from future taxes.

How to Take Action

1. File Form 706: Work with a tax professional or use tools like TaxLasso to ensure accurate and timely filing.
2. Review Property Valuations: If your property’s valuation is inflated, protest it to reduce your taxable estate. TaxLasso simplifies this process, saving you hours of DIY work or thousands in legal fees.

Why Choose TaxLasso?

• DIY Alternative: Instead of spending hours navigating complex forms, TaxLasso takes just 5 minutes to provide professional-level insights.
• Legal Firm Alternative: Save thousands compared to hiring a legal firm while maintaining full control over your estate planning.

Portability is a powerful tool for Houston homeowners. Act now to protect your estate and maximize your exemptions.

E-Filing vs. Paper Filing

When filing an estate tax return, e-filing is faster, more secure, and less prone to errors compared to paper filing. The IRS strongly encourages e-filing, and starting in 2025, e-filing will be mandatory for most estate tax returns. Here’s what Houston homeowners should consider:

Key Benefits of E-Filing

• Faster Processing: E-filed returns are typically processed in weeks, while paper filings can take months.
• Reduced Errors: E-filing software automatically checks for mistakes, reducing the risk of delays or audits.
• Immediate Confirmation: You’ll receive an acknowledgment from the IRS within 24 hours, ensuring your return was received.
• Secure and Trackable: E-filing uses encryption to protect sensitive data, and you can track your return’s status online.

When Paper Filing Might Be Necessary

• Complex Cases: If your estate involves unique assets (e.g., Houston-specific property valuations or oil/gas interests), paper filing may be required.
• IRS Exceptions: Certain estates may qualify for exemptions from the 2025 e-filing mandate.

How TaxLasso Simplifies E-Filing for Houston Homeowners

Navigating estate tax returns can be overwhelming, especially with Houston’s unique property tax challenges. TaxLasso offers a streamlined solution:

• 5-Minute Process: Unlike DIY methods that take hours, TaxLasso’s platform simplifies e-filing with professional-level insights.
• Cost-Effective: Save thousands compared to hiring a legal firm while maintaining full control over your filing.
• Houston-Specific Expertise: TaxLasso understands local property tax nuances, ensuring accurate valuations and compliance.

For Houston homeowners, e-filing is the clear choice for estate tax returns. With tools like TaxLasso, you can save time, reduce costs, and ensure your filing is error-free.

When to Hire a Professional

Hire a professional to file your estate tax return when the estate’s value exceeds the federal exemption limit ($12.92 million in 2023, increasing to $13.61 million in 2025) or when complex assets like Houston real estate, business interests, or investments are involved. Here’s when professional help is essential:

Complex Assets or High-Value Estates

• If the estate includes multiple properties, especially in Houston’s fluctuating real estate market, a professional can ensure accurate valuations and compliance with IRS rules.
• For estates with business interests, stocks, or international assets, professionals can navigate intricate tax laws and minimize liabilities.

Disputes or Audits

• If the IRS challenges the estate’s valuation or tax calculations, a professional can provide expert representation and documentation.
• For Houston homeowners, property tax valuations can be contentious. Tools like TaxLasso simplify the process by offering professional-level insights in just 5 minutes, saving time and money compared to hiring a legal firm.

Time Constraints or Lack of Expertise

• Filing an estate tax return requires detailed knowledge of federal and state tax laws. Mistakes can lead to penalties or audits.
• DIY filing can take hours, but TaxLasso streamlines the process, offering affordability and control without the high cost of legal firms.

When to Consider Alternatives

• For smaller estates below the exemption limit, DIY filing may suffice. However, even in these cases, tools like TaxLasso provide peace of mind by ensuring accuracy in just minutes.
• Legal firms offer expertise but can cost thousands of dollars. TaxLasso bridges the gap, delivering professional results at a fraction of the cost.

In summary, hire a professional when dealing with high-value estates, complex assets, or IRS disputes. For Houston homeowners, TaxLasso is the ideal middle ground, combining affordability, speed, and professional-level accuracy.

What Happens After Filing?

After filing an estate tax return, the IRS will review your submission to ensure accuracy and compliance with federal tax laws. Here’s what Houston homeowners can expect:

1. IRS Review and Communication

• The IRS typically processes estate tax returns within 6-9 months, but this can vary depending on complexity.
• If additional information is needed, the IRS will send a notice requesting clarification or documentation. Respond promptly to avoid delays.

2. Potential Audits

• Estate tax returns are subject to audits, especially for estates valued above the federal exemption limit ($13.61 million per individual in 2025).
• If audited, you’ll need to provide detailed records, including property valuations, appraisals, and financial statements.

3. Property Tax Challenges

• If the estate includes real estate in Houston, you may face property tax challenges, such as disputes over valuations or protests. For example, Harris County property tax rates can significantly impact estate planning.
• Tools like TaxLasso simplify this process by providing professional-level insights in just 5 minutes, saving you hours of DIY research or thousands of dollars compared to hiring legal firms.

4. Final Tax Determination

• Once the IRS completes its review, you’ll receive a final determination of the estate tax owed or a refund if overpaid.
• Payment is typically due within 9 months of the decedent’s passing, but extensions may be available.

5. Next Steps for Houston Homeowners

• If property taxes are a concern, consider using TaxLasso to protest valuations efficiently. It’s an affordable, time-saving alternative to DIY or legal firms, offering expert results without the high cost.

By understanding what happens after filing, Houston homeowners can take proactive steps to manage estate and property tax challenges effectively.

FAQs and Common Mistakes

What is the most important thing to know about estate tax returns?

The federal estate tax exemption for 2025 is projected to be $13.61 million per individual (double for married couples). If the estate’s value exceeds this threshold, you must file an estate tax return (Form 706) within 9 months of the decedent’s passing. For Houston homeowners, this often includes the value of real estate, which can push estates over the exemption limit.

Common Mistakes to Avoid

1. Underestimating Property Value: Houston’s rising property values can significantly impact estate tax liability. Failing to get an accurate appraisal can lead to penalties or overpayment.
2. Missing Deadlines: The 9-month filing window is strict. Late filings incur penalties of up to 5% per month, capped at 25% of the tax due.
3. Overlooking Deductions: Expenses like funeral costs, debts, and administrative fees can reduce the taxable estate. Many homeowners miss these deductions, increasing their tax burden.
4. Ignoring State Taxes: Texas doesn’t have a state estate tax, but if the estate includes property in other states, those taxes may apply.

How TaxLasso Can Help

Filing an estate tax return can be overwhelming, especially when dealing with property valuations and deadlines. TaxLasso simplifies the process:

• Professional-Level Insights in Minutes: Instead of spending hours on DIY research, TaxLasso provides expert guidance in just 5 minutes.
• Cost-Effective Alternative: Save thousands compared to hiring a legal firm while maintaining full control over your filing.
• Accurate Property Valuations: TaxLasso ensures your Houston property is appraised correctly, helping you avoid costly mistakes.

What’s Next?

If you’re unsure whether your estate exceeds the exemption limit or need help navigating the filing process, TaxLasso offers a streamlined, affordable solution tailored for Houston homeowners.

Conclusion

Filing an estate tax return requires attention to deadlines, proper forms, and understanding exemptions. For Houston homeowners, the key takeaway is to act now—especially with potential changes to estate tax laws in 2025. Start by gathering necessary documents and determining your filing requirements. For a streamlined, cost-effective solution, TaxLasso offers expert guidance in just 5 minutes, saving you time and thousands compared to legal firms. Don’t wait—take the next step today to ensure compliance and maximize your estate’s value.