In the year of someone’s death, several tax returns may need to be filed, depending on the individual’s financial circumstances and the applicable tax laws. This is just one of the many things the survivors need to navigate when their loved one dies. The list below defines what types of returns may need to be filed, the specifics regarding each one should be discussed with the estate and tax professionals assisting the survivors and ultimately the personal representative of the estate.
Here are the main types of tax returns that may be required:
1. Final Income Tax Return (Form 1040): The deceased person’s final income tax return needs to be filed for the period covering the beginning of the tax year up through the date of death. This return includes all income, deductions, and credits applicable to that period. The final individual income tax return will be due on April 15 of the year following death. There are no provisions to allow for filing the return sooner.
2. Estate Tax Return (Form 706): If the deceased person’s estate is large enough to trigger federal or state estate taxes, the personal representative may need to file an estate tax return. The personal representative may also file Form 706 to capture the unused exemption of the decedent if their spouse survives them. This return reports the estate’s total asset value and calculates any taxes owed. When this return is required, it is due nine months from date of death.
3. Estate Income Tax Return (Form 1041): If the deceased person’s estate generates income after their death, an estate income tax return may be required. This is typically applicable if the estate’s gross income exceeds $600. It covers the period from the date of death until the last day of the month before the first anniversary of death. Th income tax return for the estate is due on the fifteenth day of the fourth month after the close of the tax year.
4. Gift Tax Return (Form 709): If the deceased person made significant gifts during their lifetime that exceeded the annual gift tax exclusion or the lifetime gift tax exemption, a gift tax return (Form 709) may be required. Gifts made within a certain period before the date of death may need to be reported. A gift tax return is due on April 15 of the year following death.
To put the above information into understandable terms, let’s look at the consideration for filing requirements for an individual who passes away on May 9, 2024.
1. The final Form 1040 will cover will be required and will cover the period from January 1, 2024, through May 9, 2024. It will need to be filed by April 15, 2025
2. If their estate exceeds $13.61 million, they will have a filing requirement. If their estate is less than $13.61 million, but they have a surviving spouse, the personal representative should determine if filing to capture the unused exemption for the surviving spouse should be elected. A required return would be due on February 9, 2025.
3. For the estate income tax return, a determination will need to be made about the tax year, filing on a calendar year or a fiscal year. If filing on a calendar year, the year would cover the period from May 10, 202 through December 31, 2024, and would be due on April 15, 2025. Alternatively, a for a fiscal year, the year-end would be April 30, 2025, and the return would be due August 15, 2025.
4. A gift tax return filing requirement is determined by examining if the decedent made any taxable gifts from January 1 through May 9, 2024.
Relying upon the advice of a tax professional when navigating the return filing requirements can alleviate the stresses involved in administering an estate. Contact us today to learn more about our estate and trust planning services.
More Recent Stories
Input your search keywords and press Enter.