The decedent’s death has two significant tax consequences: It ends the decedent’s last tax year for purposes of filing the decedent’s federal income tax return, and it establishes a new tax entity, the ‘estate.’
The personal representative may be required to file one or more of the following returns, depending upon the circumstances:
- The decedent’s final Form 1040, Federal Income Tax Return, reporting the decedent’s income for the year of the decedent’s death.
- One or more Forms 1041, Federal Income Tax Returns for the Estate, reporting the estate’s taxable income.
- Form 709, Federal Gift Tax Return(s), reporting gifts made by the decedent prior to death.
- Form 706, Federal Estate Tax Return, reporting the decedent’s gross estate, depending upon the value of the gross estate.
The personal representative may also be required to file other returns not specifically mentioned here.
The personal representative has the responsibility to pay amounts owed by the decedent or the estate to the IRS. Taxes are normally paid from probate assets in the decedent’s estate, and not by the personal representative from his or her own assets; however, under certain circumstances, the personal representative may be personally liable for those taxes if they are not properly paid.
The estate will not have any tax filing or payment obligations to the state of Florida; however, if the decedent owed Florida intangibles taxes for any year prior to the repeal of the intangibles tax as of Jan. 1, 2007, the personal representative must pay those taxes to the Florida Department of Revenue.