FORGOT YOUR DETAILS?

THE FACTS ON ESTATE & TRUST TAXES

CS TAX Problem Solvers

Decedents Final Return

When a person dies, a final individual 1040 tax return must be completed to report the income up to the date of death for that year. If there is a surviving spouse, a return is completed as Married Filing Joint. Full exemptions and deductions are allowed as though the decedent was alive for the entire year. When a will exists there is a person designated as an executor, personal representative or administrator of the decedent’s estate. This person would handle any paperwork for the return and any balances due or refunds received.

Estates

Upon the date of death, any assets the decedent owns become property of an estate which is created and given a Federal Identification number as a separate entity. If the assets held in the estate generate $600 or more of gross income during the year, an estate return (Form 1041) must be filed. Again, the person appointed as executor of the estate would handle gathering this information. If there are assets in the estate that are to be distributed to beneficiaries and if there is property to be sold, the estate would remain open until this takes place and a return will be filed for each year it is open. A closing certificate is requested when a final estate return is filed and the entity is dissolved.

Trusts

A trust must be created by an attorney. A trust is an entity created to hold assets and can be created while a person is alive and referred to as a living trust. The trust may also be created according to instructions in a will (Testamentary trust). The trust tax return is also Form 1041 and is required to be filed if there is gross yearly income of $600 or more. A trust may be set up to stay open for many years. Either the trust pays the taxes on the income or the income from the trust can be distributed to specified beneficiaries each year. A tax return is filed each year reporting the income from the assets. Any beneficiaries would receive a K-1 form from the trust reporting their share of the income.

Call our Tax Professionals today at 608-233-9769 and make an appointment to learn how our accounting and payroll services can help your business.

Office Hours

Monday: 9:00am - 6:00pm
Tuesday: 9:00am - 6:00pm
Wednesday: 9:00am - 6:00pm
Thursday: 9:00am - 6:00pm
Friday: 9:00am - 6:00pm
Saturday: Closed
Sunday: Closed
TOP