Counsel Wilda Lin penned an article for The CPA Journal titled “Basic Tax Reporting for Decedents and Estates.”
The article provides a roadmap of the tax obligations that the fiduciary of an estate will likely encounter. The fiduciary may be a professional experienced with estate administration or may be a family member or friend of the decedent who is nominated under the Will. Practitioners often need to guide fiduciaries on these tax filing requirements after a loved one or client has passed away.
When an individual dies, a new taxpayer is created: the estate. As Wilda explains, the fiduciary may need to file a final Form 1040 depending on how much income the decedent earned in the year of death. The fiduciary may also need to file Form 1041 if the estate continued to earn income after the date of death.
The article also covers gift tax returns, which may need to be filed if the decedent made taxable gifts during life, and estate tax returns if the estate is large enough to meet the filing threshold. It also describes situations where a fiduciary may not be required to file a federal estate tax return but chooses to do so because it benefits the decedent’s surviving spouse or to establish the new basis in the estate assets. In addition, the fiduciary may not need or choose to file a federal estate tax return, but may still need one prepared if there are state estate tax filing requirements.
The complete article can be found here.
About Wilda Lin
Wilda’s practice focuses on estate planning and administration and U.S. estate, gift, and generation-skipping transfer tax issues. She also has a background in international taxation, non-profit and tax-exempt organizations, and transactional tax planning.
