Saturday, August 1, 2009

Am I Responsible For Filing Estate Or Decedent's Tax Returns?

Executors or administrators are responsible for estate and income tax filings. In the year of death, the executor or administrator must file the decedent's federal and state income tax returns (Form1040). The executor or administrator should also verify that the decedent's federal and state income tax returns from previous years have been filed, making sure to take corrective action if deficiencies are found.

The executor or administrator should file for a federal employer identification number (EIN) for the estate if estate tax or income tax filings are required. Estate taxes are filed on Form 706 while income taxes are filed on Form 1041. Further, all outstanding tax liabilities of the decedent that may arise during administration, including property and business taxes must be paid.

Importantly, federal and state law holds the personal representative personally liable for income and estate taxes where funds have been distributed without reserving enough to pay the various taxes. As such, the representative should be sure to create a reserve sufficient to pay the various taxes. Obtaining expert legal advice regarding the preparation and filing of these returns is important so you are not liable if there are any mistakes made.

Many of the decisions a client needs to make in the areas of estate planning and probate and trust administration are governed by the application of the California Revenue and Taxation Code and the Federal Internal Revenue Code. We advise clients in many areas of estate gift, income, and real property tax law, and regularly prepare formal requests for specific rulings from the taxing authorities. Our expertise extends to preparation of estate tax returns (which is a specialized return many accountants do not regularly prepare), and representation of estates in tax audits.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210.

He focuses his practice on Estate Planning, Trust and Probate Administration, Beneficiary and Trustee Representation, Probate Litigation, Tax Law, and Nonprofit Law. He represents clients throughout Southern California and his offices are conveniently located for clients in the Los Angeles, Santa Barbara, Orange, Riverside and San Bernardino Counties.

The firm website is http://www.moravecslaw.com/.
The firm is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.
Phone: (626) 793-3210.