MN Probate Law | Filing a Minnesota Estate Tax Return

Filing a Minnesota Estate Tax Return – IRS Form 1041

Being selected as executor of an estate can be a daunting task, as the duties for executor can be extensive and complicated. As the executor of an estate, you are responsible for filing a federal income tax return (Form 1041) if the estate has a gross income for the tax year of $600 or more. An estate may generate income from real estate rental in the estate, interest on an estate bank account, or more often, salary that was owed and not yet paid to the deceased person before their death.

A competent tax preparer or CPA can provide guidance and tax preparation services for any estate tax returns to help handle the process. But sometimes an estate may be limited the executor may seek to complete the return on their own.

Money the Deceased Had At Time of Death

As the executor, an efficient distribution of all the estate assets to the beneficiaries who are to inherit them may prevent the estate from incurring income, and you may not need to file an income tax return for it. Tools that may assist in immediate distribution of assets include joint ownership of a house with the deceaseds spouse and payable-on-death classifications on bank accounts for the deceased. These assets will not remain in the estate, but will pass immediately to the new owners upon death of the decedent.

(These estate tools will be discussed in detail in the future). Since these assets have passed out of the estate, any income they create after death will not be considered for the estate. If the total income for the estate falls under $600, then no estate return is required.

IRS Form 1041

However, if the executor finds themselves in a position where an estate return must be filed, what is required? IRS Form 1041 is the estate tax return form. Form 1041 returns are similar to the standard personal income tax returns filed through Form 1040. The executor of the estate is responsible for filing the estate return. Filing is completed under the estate name and taxpayer identification number of the estate, which can be obtained through the IRS.gov website at no cost. All income and revenues for the estate are reported on the form along with all claimed deductions. These deductions can include the standard $600 exemption, distributions to beneficiaries, executors fees, expert fees, administration fees, and other available fees. Instructions for the 1041 form can provide more details on each of these potential deductions.

The tax year for the estate begins on the date the decedent passes away. The executor can file the estate tax return any time up until 12 months after the death, in a period ending on the last day of a month. In addition to filing the estate return, the executor must distribute a Schedule K-1 form to each beneficiary that received funds from the estate during the year. The beneficiaries are responsible for any tax consequences on the funds they received.

If you find yourself as executor of an estate and need assistance or guidance in processing the estate, please contact our office to speak with an attorney.

Minnesota Estate Tax Return Lawyers

Joseph M. Flanders and Flanders Law Firm LLC have years of experience helping people with tax returns and Minnesota probate law. Contact the law firm today to speak with a probate attorney for a free initial consultation at 612-424-0398.