Does a decedent need to file a personal income tax return for his final, partial year, if his income is such that he would not be required to file had he lived out the full year?
Is there a similar threshold regarding an estate tax return - can it be avoided if the income from the time of death to the time the estate is terminated is less than some threshold amount?
Well, not the decedent himself, of course.
I don't do returns, so I don't know if a final return is required even with no taxable income. My guess is that at least it's a good idea to notify the IRS that it's a final return.
On estate taxes the code says that a return is required whenever the value of the decedent's assets are greater than the lifetime exemption amount, even if no taxes are due as a result of deductions.
___ Stu
Direct answer: No. Best answer: It is always good practice to file a final return as that starts the statute of limitation clock ticking. In addition, some states require a final tax return with a copy of the death certificate in order to remove the decedent from the tax role. E.g., my state of New Mexico.
As you ask about income, I assume you are referring to Form 1041, the income tax return for an estate.
An income tax return must be filed if the estate has gross income for the tax year of at least $600 or a beneficiary is an NRA. Note that I said "tax year" and not calendar year. You can use the period from the date of death to the end of the calendar year as the tax year or you can create a fiscal year that encompasses a full 12 months.
would that be the value of the decedent's assets are greater than (lifetime exemption amount - prior gifts applied against the exemption amount)?
No, you don't deduct the lifetime exemption when determining whether to file an estate tax return. You do exclude gifts that were under the annual exclusion for years where no gift exceeded the annual exclusion.
___ Stu
Direct answer: No. Best answer: It is always good practice to file a final return as that starts the statute of limitation clock ticking. In addition, some states require a final tax return with a copy of the death certificate in order to remove the decedent from the tax role. E.g., my state of New Mexico.
============Note also that there are some items which can be claimed only on a decedent's final return which can cause an NOL and thus free up previously paid taxes.
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