During time of grief taxes aren't always in the forefront of our minds, so let Hirsch Tax Pros help everyone involved with filing an estate or trust tax return.
Filing the estate income tax return
The tax year for the estate begins on the day of the person’s death. If you are the legal representative of the estate, you have the option to file the estate’s income tax return at any time during the twelve months following the death.
The only requirement being the tax period must end on the last day of the month you choose to file. If you choose to file the return prior to the twelfth calendar month, the estate is then considered to have a fiscal tax year.
Hirsch Tax Pros will need the following items to complete the return:
- estate’s income, such as rents, dividends and interest received.
- Required income distributions to beneficiaries
- Executor’s fees
- Legal, accountant and other professional fees
- Administrative expenses
- Miscellaneous deductions, including office supplies and investment advice. (The estate can only deduct miscellaneous deductions to the extent they exceed 2 percent of adjusted gross income.)
- Information about each beneficiary to whom the estate may be passing income will also need to be reported.
Hirsch Tax Pros can also prepare a Schedule K-1 for each beneficiary, which documents the income they received and can be used for their own tax return purposes. By preparing a Schedule K-1, the estate can then report a deduction for the income amount on its Form 1041 to ensure the income is only taxed once.
Wrapping it up
After we finish preparing your estate or trust return, be sure to file by the tax return deadline (April 18, 2016 or April 19, 2016 for residents of Maine or Mass.). If the estate has a fiscal tax year, the deadline to file is the 15th day of the fourth month following the close of the tax year.
Also, be sure to pay any tax due from the estate assets and distribute Schedule K-1 to the beneficiaries showing their share of distributions.