Tax Forms and Procedures for Executors and Personal Representatives of Estates

When an individual dies, it can be challenging to sort through the estate’s tax matters. The executor or personal representative of the estate may be responsible for filing various returns and paying any taxes that are owed. This article describes some of the tax forms and procedures to follow when handling an estate’s income taxes.

In many cases, the executor of an estate will have to file a federal income tax return, Form 1041, U.S. Income Tax Return for Estates and Trusts, on behalf of the deceased individual (decedent). In this type of return, you report the decedent’s income items, such as rents from real property, interest earned on bank accounts, and earnings from other investments. In addition, you report any expenses that are incurred by the estate, such as funeral costs, if applicable.

If the estate is a trust, you should also complete Form 1042, U.S. Trust Income Tax Return. This form is used to report the trust’s income and deductions, and it is usually due nine months after death, unless an extension is granted.

Depending on the size of the estate, it may also be necessary to file quarterly estimated tax payments on Form 1041. This is especially true if the estate expects to have a large gain or loss, such as from the sale of a business or other valuable property.

As with regular income tax returns, the executor of a deceased estate can claim refunds or losses by submitting IRS Form 1310. The form is known as the Statement of Person Claiming Refund Due to Deceased Taxpayer. It is important to note that you should not include medical expenses incurred by the decedent on this form, but instead should show them as liabilities on the federal estate tax return (Form 706).

The personal representatives of a deceased individual’s estate must also file any state tax returns that may be required, depending on the laws in their jurisdiction. In some states, the deceased individual’s heirs are taxed on their share of the estate’s assets, while in other states, tax is only imposed on the decedent’s unclaimed assets.

A good place to start when handling a loved one’s estate is by gathering all of their financial records and personal information, such as bank statements, retirement account documents, W-2s and Social Security numbers. It is also wise to get expert help, such as from a probate attorney or from a tax professional who is experienced in dealing with estates. It is a good idea to contact the deceased’s previous tax professional for copies of prior return(s). A copy of the deceased individual’s tax transcript can be obtained from the IRS by submitting Form 4506-T. It should be noted that there is a penalty for late filing of an income tax return after death, unless it can be shown that there was reasonable cause for the delay. A New York estate administration lawyer can provide more guidance on this topic.

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