Trust & Probate Litigation Attorney

42. How are taxes handled in probate?

When a person dies, the date of death establishes the end of the tax year for the decedent, and establishes the start date for the decedent’s estate. The estate is a new, separate entity for tax and legal purposes. For federal taxes, the personal representative may need to prepare: 1) Form 1040 Federal Income Tax Return for the decedent; 2) Form 1041 Federal Fiduciary Income Tax Return for the estate; 3) Form 706 Federal Estate Tax Return; and 4) Form 709 Federal Gift Tax Return(s). The personal representative will also need to prepare similar tax returns for state and/or local taxes. There may also be past years’ taxes which have not been paid which the personal representative should address.

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