4 Income Tax Forms Executors May Need To Work With

Are you the executor of an estate? If so, you have many responsibilities that may be unfamiliar to you. One of the most common responsibilities in this role to file taxes for the estate. What income tax forms will you need to file? And why should you seek professional assistance with them? Here's what every executor should know about the four most common income tax forms they may need to deal with.

1. Personal Income Tax Return. In the year in which the person passed away, would they normally have filed an income tax form? If so, one should be completed by the executor or spouse by the next normal due date. Executors should also determine if the decedent had filed the prior year if they passed away in the first few months. This Form 1040 is largely standard, but you must follow a few extra procedures to stipulate it's the final one. 

2. Estate Income Tax Return. The second most common tax form for executors is the estate's income tax return. While the estate is in existence — during probate and before the final distribution of assets to heirs — it will likely need to file an estate tax return (Form 1041) to declare any income. This is an unfamiliar form to most people, so you should get help with it. 

3. Federal and State Estate Tax Return. Many executors will not need to file an estate tax return due to the high exemption amount allowed under current IRS law. However, if the estate meets the minimum threshold, it's vital to get professional tax preparation assistance because these returns are complex. Failure to declare all deductions and credits will result in significant unnecessary tax. 

4. State Inheritance Tax Return. Inheritance taxes are not paid by the estate but rather by the beneficiary. There is no federal inheritance tax, but a few states impose one on heirs. The executor may need to discuss with beneficiaries their personal inheritance tax obligations, so familiarize yourself with the basics if any heirs live in affected states. 

Most executors will have to deal with at least one of these income tax forms during their role. And that executor could be held liable by beneficiaries or the probate court if they complete tax filings incorrectly.

With the onus placed on you to do things right, the best way to begin is to meet with experienced tax preparation services in the deceased's state of residence. With their help, you can successfully meet this challenge and move forward administering all your responsibilities. 

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