IRS Form 706 (Schedule W) - Continuation Schedule for Form 706 Schedules

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IRS Form 706 (Schedule W) – Continuation Schedule for Form 706 Schedules – Navigating estate taxes can be complex, especially when filing IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. For executors dealing with extensive assets or deductions, IRS Form 706 Schedule W—the Continuation Schedule for Form 706 Schedules—serves as a critical tool to ensure complete and accurate reporting. Whether you’re handling a large portfolio of real estate, stocks, or deductions for administrative expenses, Schedule W provides the extra space needed to avoid errors and comply with IRS requirements.

In this comprehensive guide, we’ll break down what Schedule W is, when to use it, step-by-step instructions for completion, and tips to optimize your filing. Updated for the September 2025 revision, this article draws directly from official IRS resources to help estate professionals and individuals file confidently.

What Is IRS Form 706 and Why Does Schedule W Matter?

IRS Form 706 is the official return used by the executor of a decedent’s estate to calculate federal estate taxes under Chapter 11 of the Internal Revenue Code, as well as generation-skipping transfer (GST) taxes under Chapter 13. It’s required if the gross estate exceeds the applicable exclusion amount—$13.61 million for decedents dying in 2025—plus adjusted taxable gifts.

Schedule W enhances Form 706 by acting as a flexible extension for its supporting schedules. Previously known simply as the “Continuation Schedule for Form 706,” it was officially renamed Schedule W (Form 706) in the 2025 update to streamline organization and detach it from the main form for easier use. This schedule is essential for estates with voluminous details, preventing the need for handwritten attachments or incomplete disclosures that could trigger audits.

Key benefits include:

Expanded Reporting Capacity: Adds lines for assets (Schedules A-I) and deductions (Schedules J, K, L, M, O).
Special Elections: Supports elections for special-use valuation of farm or business property and portability of the deceased spousal unused exclusion (DSUE).
Compliance Assurance: Ensures all required details are captured, reducing rejection risks.

When Should You Use Schedule W for Form 706?

Not every estate requires Schedule W, but it’s indispensable in these scenarios:

Insufficient Space on Main Schedules: If Schedules A (real estate), B (stocks and bonds), or others lack room for all items, attach Schedule W immediately after the relevant schedule.
Complex Asset Portfolios: Estates with numerous mortgages, notes, cash holdings (Schedule C), life insurance (Schedule D), or jointly owned property (Schedule E) often overflow standard lines.
Deduction Overloads: For extensive claims like decedent debts, administrative expenses, or taxes (Schedules J, K), use it to list payees, amounts, and dates without abbreviation.
Special-Use Valuation Election (§ 2032A): Elect to value qualified farm or closely held business real property at its special-use value (often lower than fair market value) to reduce tax liability. This requires detailed Parts I-IV of Schedule W.
Portability Election (§ 2010(c)(4)): Transfer the decedent’s unused basic exclusion amount to a surviving spouse. File a complete Form 706—even if below the filing threshold—to make this election via Part VI.
Protective Filings: Preserve future options, like a protective § 2032A election, without committing immediately.

For nonresident noncitizen decedents, portability is limited, but Schedule W still applies for asset continuations. Always check the decedent’s death date against the form’s revision (use the September 2025 version for deaths after August 2025).

IRS Form 706 (Schedule W) Download and Printable

Download and Print: IRS Form 706 (Schedule W)

Step-by-Step Guide: How to Complete IRS Form 706 Schedule W

Completing Schedule W requires precision—use black ink, attach it directly after the continued schedule, and total columns back to the main form. Download the latest PDF from IRS.gov. Here’s how to tackle each use case.

1. As a Continuation Sheet for Assets or Deductions

Header Setup: Enter the decedent’s name and SSN at the top. Specify the continued schedule letter (e.g., “A”) and line number.
Listing Items: Use provided columns for item number, description, CUSIP/EIN (if applicable), unit value, alternate valuation (if elected under § 2032), and value at date of death or deductible amount.
- For assets (e.g., Schedule B stocks): Include alternate value if 6 months post-death valuation applies.
- For deductions (e.g., Schedule J expenses): Detail payee, nature, date incurred, and amount.
Totals: Sum each column on page 2 and carry forward to the main schedule’s total line. Do not combine different schedules on one sheet—use multiples as needed.
Pro Tip: Number items starting from 1 on the continuation to maintain sequence.

2. For Special-Use Valuation (§ 2032A Election)

This election can save significant taxes but triggers recapture if heirs don’t continue qualified use for 15 years (or 10 for transfers after 1976). Use Parts I-IV:

Part I (Election): Check the box, list property and qualified heirs.
Part II (Valuation): Report fair market value (FMV), special-use value, adjusted basis, valuation method, and 5/8-year ownership history. Attach appraisals and affidavits.
Part III (Agreement): All parties (owners, heirs, trustees) sign, consenting to IRS liability and designating a contact agent.
Part IV (Signatures): Extra space for additional signers.
GST Impact: Adjust Schedule R for any tax differences between FMV and special-use values.

For protective elections, minimally complete Parts I and II without full commitment.

3. For Portability of DSUE (§ 2010(c)(4))

Portability allows the surviving spouse to use the decedent’s unused exclusion, potentially doubling it to over $27 million in 2025. Use Part VI:

Section A: Opt out if not electing portability.
Section B (QDOTs): Compute preliminary DSUE for Qualified Domestic Trusts, reducing for distributions.
Section C (Calculation): Subtract cumulative gifts from the applicable exclusion amount; DSUE is the lesser of unused exclusion or basic exclusion.
Section D: List predeceased spouses’ death years.
Low-Value Estates: If filing only for portability and total value is under $13.61 million, use the IRS Table of Estimated Values (e.g., report $250,000 for estates $0–$250,000) on lines 10 and 23.

Attach to a timely filed Form 706; late elections may qualify under Rev. Proc. 2022-32.

Common Mistakes to Avoid When Filing Schedule W

Even seasoned tax pros slip up—here’s how to sidestep pitfalls:

Mixing Schedules: Never blend assets and deductions on one Schedule W; it confuses totals.
Incomplete Descriptions: Vague entries (e.g., “stocks”) invite IRS queries—include CUSIP numbers and full details.
Forgetting Attachments: Omit appraisals or agreements at your peril; retain originals for audits.
Valuation Errors: Use date-of-death FMV unless alternate valuation is elected; special-use requires proof of qualified use.
Overlooking GST: Special valuations affect skip-person transfers—reconcile with Schedule R.
Unsigned Agreements: § 2032A elections fail without all parties’ signatures.

2025 Updates to Schedule W: What Executors Need to Know

The September 2025 revision brings efficiency-focused changes:

Renaming and Detachment: Now distinctly “Schedule W,” separated from Form 706 for modular filing.
Enhanced Portability Rules: References updated Rev. Proc. 2022-32 for relief on late DSUE elections; expanded estimated-value table up to $11.18 million.
Schedule T Integration: Replaces old Schedule A-1 for § 2032A, streamlining special-use filings.
No Major Substantive Shifts: Core mechanics remain, but examples now use 2025 dates (e.g., death on January 1, 2025).

These tweaks reduce paperwork while maintaining rigor—always verify against the latest i706.pdf.

Final Thoughts: Streamline Your Estate Tax Filing with Schedule W

IRS Form 706 Schedule W isn’t just an add-on; it’s a safeguard for thorough estate tax compliance, from simple continuations to sophisticated elections like special-use valuation and portability. By leveraging its structure, executors can minimize taxes, avoid penalties, and honor the decedent’s legacy efficiently.

For personalized advice, consult a tax professional. Download forms and instructions at IRS.gov. Filing deadline: 9 months post-death, with extensions available via Form 4768.

This article is for informational purposes only and not tax advice. Verify with current IRS guidance.