How to File Estate Tax

Two Methods:Filing an Estate Income Tax ReturnFiling an Estate and Gift Tax Return

The estate of a deceased person is considered a separate legal entity from the person for tax purposes. If you are the executor or administrator of an estate, you probably will have to file the final personal income tax return for the deceased person. You also may be responsible for filing an estate income tax return or an estate and gift tax return. These two taxes are completely different. While you typically can file an estate income tax return on your own, you should avoid attempting an estate and gift tax return unless you are an attorney, accountant, or tax professional with experience in the area.[1]

Method 1
Filing an Estate Income Tax Return

  1. Image titled File Estate Tax Step 1
    Determine whether you need to file an estate income tax return. You typically only need to file an estate income tax return if the estate has received income of $600 or more.[2]
    • Estate income is different from any income earned by the deceased person in the year he or she died. For that income, you can file a regular income tax return just as living people do.
    • Estate income would include rent paid on real estate the deceased person owned or interest on an estate bank account.
    • You also must file an estate income tax return if one of the deceased person's beneficiaries is a nonresident alien.
    • Trusts with income over $600 also must pay estate income taxes.[3]
  2. Image titled File Estate Tax Step 2
    Calculate the estate's tax year. Generally you have one year from the date the deceased person died to file an estate income tax return.[4]
    • Although the tax period begins on the date of death and ends 12 months later, it must end on the last day of the final month.
    • For example, if the person died on January 15, 2016, her tax year would begin on January 15, 2016 and end on January 31, 2017.
    • You can file an estate income tax return at any time during that 12-month period.
  3. Image titled File Estate Tax Step 3
    Download IRS Form 1041. This form is similar to Form 1040 with which you are probably familiar, but has a few differences as it is used for estate income taxes.[5]
    • You can download Form 1041 and instructions on the IRS's website at
    • Keep in mind that you also may be responsible for paying quarterly estimated taxes on behalf of the estate. You can find out in the Form 1041 instructions if estimated taxes are required for the estate you are administering.[6]
  4. Image titled File Estate Tax Step 4
    Gather documents. Before you begin filling out the form, figure out what documents you'll need by reading the form and instructions and make sure you have them handy.[7]
    • Generally, you will need reports or statements of all the estate's income, as well as receipts or other statements that document deductible expenses paid by the estate.
  5. Image titled File Estate Tax Step 5
    Enter identification information for the estate. The estate income tax return is filed under the name and tax ID number, or EIN, of the estate.[8]
    • This number will not be the same as the deceased person's Social Security number, since the deceased and his or her estate are separate legal entities for tax purposes.
    • If you don't already have a tax ID number for the estate, you can request one online at
    • As the executor, you should put your name as the name of fiduciary, along with your title. For the address, use the address where mail should be sent for the estate or trust.[9]
    • Identify the type of entity by checking the appropriate box. Depending on the details of the estate, you may have to check more than one box.
    • For "date entity created," enter the deceased person's date of death.
  6. Image titled File Estate Tax Step 6
    Report the estate's income. Enter each type of income on the appropriate line, then provide the total where required.[10]
    • Form 1041 differentiates between interest income, ordinary and qualified dividends, business income or loss, capital gain or loss, farm income, and other income.
    • Just as with a regular individual tax return, if the estate has business income or capital gains, you will have to complete the appropriate schedule to enter the correct amount of taxable income or loss.
  7. Image titled File Estate Tax Step 7
    Take all appropriate deductions. In addition to the $600 exemption granted to all estates, the estate may have incurred other expenses that are deductible.[11]
    • The same deductions that are available to living individuals also are available for estates. However, on an estate income tax return you also can deduct distributions to beneficiaries.[12]
    • Examples of common deductions that may be available to the estate include executor's fees, fees the estate paid to experts such as accountants or attorneys, and expenses of estate administration such as the publication of probate notices or the cost of buying a bond.[13]
  8. Image titled File Estate Tax Step 8
    Pay any tax due. As the executor, you are responsible for making sure any taxes due are paid from estate assets.[14]
    • You can file and pay taxes either online or through the mail. The IRS instructions for Form 1041 include addresses where you should mail completed paper tax returns. Note that these addresses may differ depending on whether you've included a check or money order with the completed return.[15]

Method 2
Filing an Estate and Gift Tax Return

  1. Image titled File Estate Tax Step 9
    Assess the value of the estate. As of 2016, only estates larger than $5.43 million owe federal estate tax.[16]
    • This amount will increase each year in line with inflation, and does not include any property left to a surviving spouse or a tax-exempt charity.
    • More than 99 percent of all estates are not large enough to owe federal estate tax. The very large estates that do have to pay are taxed at a rate of 40 percent.[17]
  2. Image titled File Estate Tax Step 10
    Determine when the tax is due. If the estate must pay estate and gift tax, it is due nine months after the date of death.[18]
    • You may apply for a six-month extension provided you make your request before the due date and pay the estimated correct amount of tax.
  3. Image titled File Estate Tax Step 11
    Download the appropriate forms. Depending on the assets of the estate, there are several different forms and schedules that may have to be filed to complete the estate and gift tax return.[19]
    • Generally, you must file Form 706, which reports on the estate itself. You also may have to file Form 709, on which you report certain transfers such as generation-skipping transfers and others subject to the federal gift tax.
  4. Image titled File Estate Tax Step 12
    Hire a professional. Because the estate and gift tax is complex and there is a lot of money at stake, bring on a professional such as a certified tax agent, CPA, or attorney to assist you with filling out and filing the forms.[20]
    • If the estate already has an accountant or attorney, he or she may be able to assist with filing federal estate and gift tax returns.
    • As the executor of the estate, you should have the power to hire professionals as needed to take care of financial or legal matters that are outside your area of expertise.
    • Any professional you hire would be paid out of the estate's assets, and his or her fees generally would be deductible on the estate's income tax return.[21]
  5. Image titled File Estate Tax Step 13
    Find out if state estate taxes also are due. Even if the estate isn't large enough to owe federal estate taxes, some states also impose separate estate taxes.[22]
    • Whether a separate state estate tax is due depends on where the deceased person lived or owned real property.[23]
    • While fewer than half of all states impose an estate tax, many of these states set the value of estates subject to the tax much lower than the federal limits. For example, estates in Massachusetts or Oregon that are worth $1 million or more must pay a separate state estate tax.[24]

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Categories: Taxes and Fees | Finance and Business