The Federal Estate Tax Return
If you are named the executrix of a will, you will have to understand the tax implications of administering an estate. Some items to consider:
- If the estate is worth more than $1,500,000, for 2005 or $2,000,000 for 2006 you are required to file the federal estate tax on IRS Form 706.
This form, due 9 months after the death, is time-consuming and requires detailed information about all of the estate’s assets, so it is important that you contact an appraiser as soon as possible.
Like attorneys, appraisers specialize in certain fields so be sure that the type of assets match your appraiser’s experience and qualifications.
- IRS form 712 is attached to IRS Form 706 and must be completed by the insurance company. Often, it takes insurance companies a long time to process these forms, so it is important to contact the insurance company immediately.
- Several states also levy a state estate tax that coincides with the due dates of the federal forms.
- An income tax return must be filed on IRS form 1041 each year that the estate is open. An attorney or an accountant can help you with this.