If you’re the executor of a deceased person’s estate, you may need to file a tax return for that estate. In some states, the deadline for filing such a return is nine months after death, although this deadline is normally extended automatically. A deceased person’s estate is a distinct legal entity for tax purposes, so it must have its own taxpayer identification number (TIN). While most people use their social security number as their TIN, the law requires that you use a unique identifier for a deceased person’s estate. This identifier is called a federal tax identification number or FEIN.
The executor of an estate will usually file a federal income tax return, Form 1041. If your state has an income tax, you will also need to file a separate state return. This return reports the gross value of the estate’s assets at the date of death, adds back any gifts made during the deceased person’s lifetime and calculates the tax due if those two numbers exceed the filing threshold in existence for that year — currently 11.7 million dollars.
If your state has an estate tax, you’ll need to check with the state’s taxing authority to find out what forms you will need to file. Some states follow the federal rules for gift and estate taxes, while others have their own unique laws. For example, in some states, you can deduct certain expenses from the estate’s taxable value. These include investment advice, safe deposit box rentals, postage and travel expenses, a reasonable allowance for funeral expenses and trustee or executor fees.
Most estates are too small to trigger a gift or estate tax, but it’s worth checking with the IRS to be sure. You should be able to get information about what forms are needed for your estate’s size from the IRS by calling 1-800-829-3676.
The final estate tax return, Form 1041, is usually due by the 15th day of the fourth month after the end of the estate’s taxable year. This is the same deadline for calendar year estates that are required to file an annual return. If you don’t have enough time to complete the return, you can request an automatic extension of five and a half months by filling out Form 7004, Application for Automatic Extension of Time to File Various Business Income Tax, Information and Other Returns.
While it’s the executor of an estate who files this tax return, any beneficiary who receives income from the estate is responsible for paying the tax on that income. This is because beneficiaries are taxed separately from the estate itself for income they earn while receiving assets from an estate or trust. Beneficiaries should receive a Schedule K-1 along with their distribution of estate income, which will report how much and what type of income they earned from the estate. If you’re handling the estate of a deceased person, be sure to follow the instructions carefully to make sure that all required returns are filed and paid in a timely manner.
