Estate and Trust Tax Return Preparation

Estate and Trust Tax Return Preparation Services

The timely filing of estate, gift and fiduciary income tax returns is a crucial step in the estate and gift tax area.

Federal Estate Tax Returns

Estates may be required to file a federal estate tax return. Federal estate tax returns are required if the estate has gross assets exceeding the current estate tax exemption currently set at $11,700,000 for 2021.

In addition, if the surviving spouse wishes to utilize any remaining tax exemption of the deceased spouse via the new portability rules, then a federal estate tax return must also be filed.

Inheritance Tax Returns

Estates may also be required to file an inheritance tax return in the state where the decedent died. For example, Pennsylvania requires the filing of an inheritance tax return. Its rules are different than the federal rules. For more details about the Pennsylvania Inheritance Tax please go to the article entitled Pennsylvania Inheritance Tax Return: The Basics.

Fiduciary Income Tax Returns: Form 1041, PA 41

In addition, fiduciary income tax returns are often times required at both the federal and state level. There are various elections and tax planning associated with the filling of such returns. In some cases, fiduciary income tax returns must be coordinated with the federal estate tax return and various elections are required.

Federal Gift Tax Returns: Form 709

Individuals are required to file gift tax returns when present interest gifts are made of over $15,000 per year to one person. If the gift is not of a present interest then a gift tax return must be filed regardless of the amount of gift. Often times filing such gift tax returns have strategic implications for the overall estate planning of a family. For a discussion of the federal gift tax rules and reporting requirements please go to the following articles:

Gift Giving: A Way To Save Estate, Gift and Income Taxes

Gifting Shares of Stock In A Bad Economy 

Gift Tax Guide

Summary of Returns That May Need To Be Filed In Connection with an Estate Administration:

Tax returns in connection with an estate or trust or for lifetime gift planning are prepared for the following taxpayers at the federal, state and local levels:

• Estate Tax Returns at the Federal level, Form 706
• Inheritance Tax Returns at the state level. For example for Pennsylvania, an estate must file the Pennsylvania Inheritance Tax Return,Form REV-1500
• Gift tax returns, Federal Form 709, for lifetime gifts and any state gift tax returns if required. For a discussion of the filing requirements for federal gift tax rules and related tax strategies, please go to the hypertext articles listed above.
• Estate fiduciary income tax returns by filing Form 1041 and PA41
• Income tax return for decedent, final lifetime income tax return of decedent.
• Trusts, Fiduciary income tax returns by filing Form 1041, PA41

In addition, many states impose filing reports or an accounting with the court or a family settlement with beneficiaries. For more on this aspect of estate administration please read Estate & Probate Administration: Do Not Try This On Your Own