How to File Estate Tax
Determine whether you need to file an estate income tax return., Calculate the estate's tax year., Download IRS Form 1041., Gather documents., Enter identification information for the estate., Report the estate's income., Take all appropriate...
Step-by-Step Guide
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Step 1: Determine whether you need to file an estate income tax return.
You typically only need to file an estate income tax return if the estate has received income of $600 or more.Estate income is different from any income earned by the deceased person in the year he or she died.
For that income, you can file a regular income tax return just as living people do.
Estate income would include rent paid on real estate the deceased person owned or interest on an estate bank account.
You also must file an estate income tax return if one of the deceased person's beneficiaries is a nonresident alien.
Trusts with income over $600 also must pay estate income taxes. -
Step 2: Calculate the estate's tax year.
Generally you have one year from the date the deceased person died to file an estate income tax return.Although the tax period begins on the date of death and ends 12 months later, it must end on the last day of the final month.
For example, if the person died on January 15, 2016, her tax year would begin on January 15, 2016 and end on January 31,
2017.
You can file an estate income tax return at any time during that 12-month period. , This form is similar to Form 1040 with which you are probably familiar, but has a few differences as it is used for estate income taxes.You can download Form 1041 and instructions on the IRS's website at https://www.irs.gov/uac/About-Form-1041.
Keep in mind that you also may be responsible for paying quarterly estimated taxes on behalf of the estate.
You can find out in the Form 1041 instructions if estimated taxes are required for the estate you are administering., Before you begin filling out the form, figure out what documents you'll need by reading the form and instructions and make sure you have them handy.Generally, you will need reports or statements of all the estate's income, as well as receipts or other statements that document deductible expenses paid by the estate. , The estate income tax return is filed under the name and tax ID number, or EIN, of the estate.This number will not be the same as the deceased person's Social Security number, since the deceased and his or her estate are separate legal entities for tax purposes.
If you don't already have a tax ID number for the estate, you can request one online at https://sa.www4.irs.gov/modiein/individual/index.jsp.
As the executor, you should put your name as the name of fiduciary, along with your title.
For the address, use the address where mail should be sent for the estate or trust.Identify the type of entity by checking the appropriate box.
Depending on the details of the estate, you may have to check more than one box.
For "date entity created," enter the deceased person's date of death. , Enter each type of income on the appropriate line, then provide the total where required.Form 1041 differentiates between interest income, ordinary and qualified dividends, business income or loss, capital gain or loss, farm income, and other income.
Just as with a regular individual tax return, if the estate has business income or capital gains, you will have to complete the appropriate schedule to enter the correct amount of taxable income or loss. , In addition to the $600 exemption granted to all estates, the estate may have incurred other expenses that are deductible.The same deductions that are available to living individuals also are available for estates.
However, on an estate income tax return you also can deduct distributions to beneficiaries.Examples of common deductions that may be available to the estate include executor's fees, fees the estate paid to experts such as accountants or attorneys, and expenses of estate administration such as the publication of probate notices or the cost of buying a bond., As the executor, you are responsible for making sure any taxes due are paid from estate assets.You can file and pay taxes either online or through the mail.
The IRS instructions for Form 1041 include addresses where you should mail completed paper tax returns.
Note that these addresses may differ depending on whether you've included a check or money order with the completed return. -
Step 3: Download IRS Form 1041.
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Step 4: Gather documents.
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Step 5: Enter identification information for the estate.
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Step 6: Report the estate's income.
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Step 7: Take all appropriate deductions.
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Step 8: Pay any tax due.
Detailed Guide
You typically only need to file an estate income tax return if the estate has received income of $600 or more.Estate income is different from any income earned by the deceased person in the year he or she died.
For that income, you can file a regular income tax return just as living people do.
Estate income would include rent paid on real estate the deceased person owned or interest on an estate bank account.
You also must file an estate income tax return if one of the deceased person's beneficiaries is a nonresident alien.
Trusts with income over $600 also must pay estate income taxes.
Generally you have one year from the date the deceased person died to file an estate income tax return.Although the tax period begins on the date of death and ends 12 months later, it must end on the last day of the final month.
For example, if the person died on January 15, 2016, her tax year would begin on January 15, 2016 and end on January 31,
2017.
You can file an estate income tax return at any time during that 12-month period. , This form is similar to Form 1040 with which you are probably familiar, but has a few differences as it is used for estate income taxes.You can download Form 1041 and instructions on the IRS's website at https://www.irs.gov/uac/About-Form-1041.
Keep in mind that you also may be responsible for paying quarterly estimated taxes on behalf of the estate.
You can find out in the Form 1041 instructions if estimated taxes are required for the estate you are administering., Before you begin filling out the form, figure out what documents you'll need by reading the form and instructions and make sure you have them handy.Generally, you will need reports or statements of all the estate's income, as well as receipts or other statements that document deductible expenses paid by the estate. , The estate income tax return is filed under the name and tax ID number, or EIN, of the estate.This number will not be the same as the deceased person's Social Security number, since the deceased and his or her estate are separate legal entities for tax purposes.
If you don't already have a tax ID number for the estate, you can request one online at https://sa.www4.irs.gov/modiein/individual/index.jsp.
As the executor, you should put your name as the name of fiduciary, along with your title.
For the address, use the address where mail should be sent for the estate or trust.Identify the type of entity by checking the appropriate box.
Depending on the details of the estate, you may have to check more than one box.
For "date entity created," enter the deceased person's date of death. , Enter each type of income on the appropriate line, then provide the total where required.Form 1041 differentiates between interest income, ordinary and qualified dividends, business income or loss, capital gain or loss, farm income, and other income.
Just as with a regular individual tax return, if the estate has business income or capital gains, you will have to complete the appropriate schedule to enter the correct amount of taxable income or loss. , In addition to the $600 exemption granted to all estates, the estate may have incurred other expenses that are deductible.The same deductions that are available to living individuals also are available for estates.
However, on an estate income tax return you also can deduct distributions to beneficiaries.Examples of common deductions that may be available to the estate include executor's fees, fees the estate paid to experts such as accountants or attorneys, and expenses of estate administration such as the publication of probate notices or the cost of buying a bond., As the executor, you are responsible for making sure any taxes due are paid from estate assets.You can file and pay taxes either online or through the mail.
The IRS instructions for Form 1041 include addresses where you should mail completed paper tax returns.
Note that these addresses may differ depending on whether you've included a check or money order with the completed return.
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Jean Freeman
Brings years of experience writing about creative arts and related subjects.
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