Decedent’s Tax Returns
The personal
representative is responsible for the following returns when required.
Form 1040, Final
return for year of death (gross income of a decedent from January 1 until the
date of death is reported on the decedent’s final income tax return).
-Form 1041, Income
tax returns for the probate estate (required if income greater than $600 is
received after death by the decedent’s estate).
-Form 706, Estate tax
return (required if decedent’s estate exceeds the estate tax exclusion
($5,250,000 in 2013) or if portability election is made.
-Form 709, Gift tax
for year of death (required if the decedent gave more than the annual exclusion
($14,000 for 2013) to any one person in the year of death or failed to file any
prior year gift tax returns).
-Returns not filed by
decedent for prior years—Form 1040, Form 1040X, Form 709.
-State income tax and
estate tax returns. Some states do not have an estate tax, but several states
have annual estate tax exclusions that are significantly less than the federal
exclusion.
A personal
representative may be personally liable for unpaid tax if he or she distributed
assets, the estate is insolvent as a result, and the personal representative
had notice of the tax claim.
Application for
Employer Identification Number (EIN)
An executor should
obtain an EIN for the probate estate as soon as possible. The identification
number must be included on estate returns, statements, and other documents. The
executor can obtain an EIN immediately by phone at 800-829-4933 or at
www.irs.gov by searching “EIN online.”
Note: The processing
time for an EIN application by mail is four weeks.
Notice of Fiduciary
Relationship
The personal
representative must notify the IRS of the fiduciary relationship. Form 56 can
be used for this purpose. File separate forms for the decedent and estate. Form
56 can also be used to notify the IRS of a change in fiduciary or termination
of fiduciary relationship.
Prompt Assessment
Form 4810 can be filed to
shorten the statute of limitations for tax returns from three years to 18
months. File Form 4810 separately after the returns are filed. Prompt
assessment can be requested for Forms 1041 and Form 1040, including
returns filed by the decedent. Prompt assessment cannot be requested for
federal estate tax.
Discharge From
Personal Liability
Personal
representatives can request discharge from personal liability for estate, gift,
and income tax after returns are filed. The personal representative is
discharged from personal liability nine months after receipt of the request by
the IRS, unless notified of unpaid tax.
Fees
All personal
representatives must include in their gross income any fees paid to them from
an estate. Generally, a taxpayer is not in the trade or business of being an
executor and will report these fees on Form 1040, line 21.
Income in the Year
of Death
Report income
actually or constructively received by the decedent before death on the final
Form 1040. Report income received after death on the return of the recipient.