The Final Estate Tax Return – Form 1040, Form 1041, and Form 8809

When someone passes away, handling their estate’s taxes can be confusing. A lot of assets can have different tax treatments, and there are several forms that may need to be filed. Depending on the size of the estate, it’s possible that the estate will need to file a federal estate tax return, Form 706, and/or one or more state income tax returns. In most cases, however, only a few of these forms will need to be completed. This article will discuss three of the most common forms that need to be filed: Form 1040, Form 1041, and Form 8809.

The estate tax return is similar to the personal income tax return that everyone files on April 15. It’s also known as a fiduciary or trust return, because it’s filed in your capacity as executor of the estate. In order to file this form, you’ll need a taxpayer identification number (TIN). While the deceased person’s Social Security number is typically used as their TIN, it’s important that you use a unique TIN for the estate. This can be obtained by applying online or calling the IRS.

For this particular return, you will need to know the deceased person’s date of death and all their taxable income for that year. This will include any wages or salaries that were earned, any investment income, and any capital gains on the sale of assets. In addition, if the deceased person had life insurance proceeds or retirement plan distributions, these will also be included in this tax return.

In many cases, the income that is reported on this return will be taxed at the same rate as the deceased individual would have paid if they were still alive. This includes interest on savings or investments and earnings on retirement account distributions. The only exception to this is if the money was left to a beneficiary, in which case it’s the beneficiary’s responsibility to pay the appropriate taxes on that money.

While some expenses can be deducted on the final income tax return, there are a few specific items that can only be deducted as debts on the estate’s tax return. These expenses can include medical bills, funeral costs, and any loans or credit card balances that are outstanding. The executor or administrator of the estate can deduct these debts, as well as any costs associated with administering the estate. This can include trustee or executor fees, legal fees, accounting fees, appraisals, and other costs incurred in selling the estate’s assets.

As you can see, it’s very important to be aware of the differences between these three forms. It’s also a good idea to consult with a knowledgeable tax professional to help ensure that all of the necessary forms are filed. This will prevent any unnecessary or costly delays in distributing the estate’s assets to the heirs and beneficiaries. The sooner these returns are filed, the sooner the grieving process can begin. This is especially important in the event that the estate is required to file a federal estate tax return, which can take up to 18 months.

Consultation Banner
Our Brand Logo

Contact Us

Paul E Groff Law
3649 Atlantic Ave Suite D
Long Beach, CA, 90807
Call Us: 562-426-8499
Recent Posts