As the old adage states, the only two things guaranteed in life are death and taxes. So putting them together can certainly be a pain. When you close an estate, there are several tax stipulations that you’ll want to keep in mind. Today in the Davidson Law Group blog, we’ll be discussing these stipulations to help the process of closing your estate a little easier.
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Filing Their Final Tax Return
The first thing you’ll need to do is file the final tax return of the deceased. When filing this return, you’ll use everything from January 1st of the year up to the date of their death. There are a few special considerations you’ll need to make when filing this. First, this return is only different if they’re unmarried. If they’re married, the living spouse will file a joint return as if they were still living at the end of the year. Another consideration you’ll have are any medical expenses they incurred before their death. You must compile the expenses and decide if you want to list the unpaid expenses as deductions yet or wait to file them in the year that they’re paid.
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Filing the Estate Tax Return
If the person left sizeable gifts, you’ll also need to file a tax return for the estate. This is called Form 706, and it can get fairly complicated. If you’re not a tax professional, it can be hard to tell whether or not you owe estate taxes and if the form needs to be filed. If you’re unsure, you can always consult with your Davidson Law Group estate attorney, and they can recommend the best course of action for you.
Filing the Estate Income Tax Return
If the estate is still earning income after their death, then you’ll also need to file an income tax return for their holdings, in addition to their federal tax return. For instance, if they have a rental property they left in the estate, it’s still earning income. This will need to be reported. The same goes for things like stocks. Capital gains will need to be reported as well. Again, if you’re not sure what to do, ask your Davidson Law Group attorney for recommendations.
Contact Davidson Law Group Today
Estate law can be complicated, but don’t let it overwhelm you. The Davidson Law Group can help you work through the details of an estate and advise you throughout the process. For more information, or to schedule an appointment, contact our attorneys in Fort Worth, Allen, or Tyler today.