The Basic Difference
Form 706 is an estate tax return generally prepared after death by the executor or other responsible estate representative. Form 709 is a gift and generation-skipping transfer tax return used to report certain transfers made during life.
Who Files?
For Form 706, the executor or estate representative is responsible for the return. For Form 709, the donor is the taxpayer, although a professional preparer may prepare the filing.
What Information Drives Each Return?
Form 706 focuses on the decedent's gross estate, deductions, tax computation, portability and estate-level GST issues. Form 709 focuses on current-year gifts, prior taxable gifts, gift-splitting elections and lifetime GST exemption allocation.
Why the Two Forms Are Often Connected
Prior lifetime gifts reported on Form 709 can be relevant to the estate tax computation, and a surviving spouse's estate planning may involve portability information from Form 706. Firms that handle estate planning and transfer-tax compliance therefore often need both workflows.
Software Considerations
| Area | Form 706 | Form 709 |
|---|---|---|
| Primary event | Death / estate transfer | Lifetime gift or GST transfer |
| Typical preparer workflow | Asset schedules, deductions, elections, estate tax computation | Gift detail, prior gifts, split gifts, GST information |
| Record history | Estate and prior gift information | Current and prior gift history |
| Output | Professional estate tax return filing copy | Gift tax return with print/PDF and supported e-file workflow |
When a Combined Software Suite Makes Sense
Practices that prepare both estate and gift tax returns may prefer a combined package so the firm has dedicated tools for each side of the federal transfer-tax workflow. LawFirmSoftware.com offers Form 706 and Form 709 separately and as a combined suite.
Official IRS references: Form 706 and Form 709.
Timing and Record Retention Are Different
Form 709 is organized by the calendar year in which lifetime gifts occur, so prior-year gift tax returns can become an important part of future preparation. Form 706 is tied to a decedent and date of death, with estate valuations, deductions and elections driving the return. Firms that prepare both should maintain records so prior gifts can be located when they later affect an estate tax matter.
Professional Judgment Still Controls
Neither return should be selected simply because software offers it. The facts of the transfer, the applicable tax rules and the current IRS instructions determine whether a return is required and how it should be completed. Software is most valuable after the professional has identified the correct filing obligation.