ADVERTISEMENT

Talk to a Local Inheritance Law Attorney

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

What Taxes Need to Be Filed After Someone Dies?

Inheritance Law > What Taxes Need to Be Filed After Someone Dies? > New York

What Taxes Need to Be Filed After Someone Dies?

by

There are three main federal tax returns that you'll need to consider filing in the year after someone has died, but it's unusual to file all three. In addition, you'll have to file an individual state income tax return for the decedent, and, in some states, a state estate or trust income tax return, or a state inheritance or estate tax return.

The person who files the return is called the Personal Representative. If there's a probate, that's the executor. If there's no official executor, the person who has taken responsibility for distributing the person's property will be in charge of paying the taxes.  If there's a trust, and that's where the assets are, this is the Trustee. Basically, the IRS will deal with the person responsible for distributing the decedent's property, however that's going to happen.

Taxes are to be paid with the decedent's money. Heirs and beneficiaries are not responsible for paying the deceased person's taxes (except for the surviving spouse, who is responsible for those taxes).  Taxes also get paid first from an estate or trust, so no one else is entitled to receive anything unless those taxes have been paid. The Personal Representative can be held personally liable for the tax bill, up to the amount that's been distributed to other creditors or beneficiaries! So, take your time and don't distribute anything until you're sure that there's enough left in the estate to cover the expected taxes due.

Final Individual Federal and State Income Tax Returns will be due by April 15th of the year following a person's death, provided the person earned at least the minimum amount of income set by federal and state law in that calendar year. If someone dies mid-year (as is almost always the case), an individual return will be due for the period from January 1 to the date of death. If a person was married at death, their spouse can still file a joint return for the year of death. You will use a form 1040 for this federal return, and New York's state income tax form for the New York income tax return.

For example, if Steven dies on May 13, his executor will need to file an individual return in the following year for the period January 1 - May 13. If Steven was married, his surviving spouse can file a joint return on April 15th of the year following Steven's death. 

Federal Estate or Trust Income Tax Returns will also be due by April 15th of the year following a death (or 4 months after the 12 months following the date of death for an estate) if a trust or estate receives more than $600 in annual gross income. Examples of income that a trust or estate could receive are things like rents, royalties, and interest income from savings accounts or bonds. You will use a form 1041 for this return. Click here for an IRS summary of filing requirements.

The estate or trust is a separate tax payer from the decedent, and must receive it's own tax identification number before filing the return. Click here to learn how to get that tax identification number.

For example, if Steven's assets were held in a living trust, the Trustee of that trust would have received a tax identification number for the trust. The Trustee would then file a trust tax return for the period from May 13 to December 31 of the year after Steven died because the trust received more than $600 in gross income. If the trust did not distribute all of the assets by December 31 of that year, another trust income tax return would be due by April 15th of the following year (and every year until the trust's assets were completely distributed). 

Alternatively, if Steven's estate were to be distributed by a Will, after Steven died on May 13, a probate would be opened, an executor appointed, and his estate would receive a tax identification number. Unlike individual returns, which are due by April 15th of the year following a person's death, and most trusts, which use the same calendar year accounting, an estate begins on the day a person dies, and continues for 12 months from that date--the returns are then due in the fourth month after the end of the estate's taxable year.

For the period from May 13 to April 30 of the following year, all of the estate's income was reported to this tax identification number. The estate then filed a 1041 estate tax return for that income the following August, because it totaled more than $600 in gross income.

State Income Tax returns for an individual are also due by April 15th. State income tax returns for estates and trusts are set by state law.

Federal Estate Tax Returns will be due nine months after a person's date of death, and there's an automatic six month extension available (but you have to request it by that nine month deadline). Very few estates need to file this return, currently the estates under $11,400,000 million (indexed every year for inflation) don't need to file a return, unless a surviving spouse wants to make use of their deceased spouse's unused exemption amount.

State estate and inheritance tax returns are due in some states. Click here to find out whether New York imposes a gift or estate tax.

 


You may also be interested in:

Every Californian's Guide to Estate Planning

by Liza Hanks
(1st Edition, January 2018)

Every Californian's Guide to Estate Planning

Every Californian's Guide to Estate Planning helps you understand the basics of leaving money and property to loved ones and charities, naming a guardian for children, and planning for beloved pets—with a special focus on issues unique to making an estate plan in California.

In Paperback and eBook (Adobe Reader)  

Buy & download now @
Nolo (publisher)


The Executor's Guide: Settling A Loved One's Estate or Trust

by Mary Randolph, J.D.
(February 2018, 8th Edition)

The Executor's Guide: Settling A Loved One's Estate or Trust

Settle an estate or trust with this all-in-one guide for executors. The Executor's Guide will help you make progress, one step at a time, through the unfamiliar land of legal procedures and terminology.

“Explains how to find state-specific information, and an appendix sorts legalities by state.”-Miami Herald

“Covers the gamut of estate chores and helps you get through them.”-Kiplinger's Retirement Report

In Paperback and eBook (Adobe Reader)  

Buy & download now @
Nolo (publisher)


8 Ways To Avoid Probate

by Mary Randolph, J.D.
(April 2016, 11th Edition)

8 Ways To Avoid Probate

“…complete details for each state…”-Los Angeles Times

The ninth updated edition of 8 Ways to Avoid Probate provides readers with solid advice on easy methods that can skip the probate process, from naming payable-on-death beneficiaries for financial accounts and owning property jointly to creating living trusts and more. It's been completely updated to include the latest estate laws and gift tax rules, and offers a focus on the transfer-on-death deeds which are now available in more states. From personal property such as autos to home ownership and bank accounts, this covers all kinds of transfers and includes case history examples throughout in a recommendation for any general lending library."-Midwest Book Review

In Paperback and eBook (Adobe Reader)  

Buy & download now @
Nolo (publisher)


Quicken WillMaker Plus 2019

by Nolo
(August 2018, 2019 Edition)

Quicken WillMaker Plus 2019

America’s #1 estate planning software
Quicken WillMaker Plus is the easiest way to create your estate plan, whether you're just getting started or you want to update your previous arrangements. This powerful software guides you through the process from beginning to end, giving you the practical and legal information you need to make the best decisions for you and your family.

In Paperback and eBook (Adobe Reader)  

Buy & download now @
Nolo (publisher)


Online Will

by Nolo
(2017)

Online Will

In Paperback and eBook (Adobe Reader)  

Buy & download now @
Nolo (publisher)


ADVERTISEMENT

Talk to a Local Inheritance Law Attorney

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

More New York info from LegalConsumer.com