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Tax Preparation Services for Estates and Trusts

Tax laws surrounding estates and trusts can be complex. Our staff are experienced with preparing and filing returns for small estates and trusts.

Form 1041 Fiduciary Tax Return of Estates & Trusts

Filing requirements for estates and trusts vary. An estate must file a return if income exceeds $600. A trust may be required to file if annual income exceeds $100.

Form 1041 Fiduciary Organizer for Estates and Trusts

Important Facts You Should Know About Estate Tax Returns

The Estate comes into existence on the date of death of the decedent. The estate ends when all assets held by the estate have been distributed. The executor of an estate should keep meticulous bookkeeping records, detailing all income and expenditures of the estate. Depending on circumstances and upon the stipulations set forth within the will, beneficiaries of the estate may receive partial distributions of their inheritance, prior to the closing of the estate.

Tax laws and rules governing administration of estates, particularly with respect to taxes, are complex. Therefore an executor can be in charge for two or three years before the estate administration is completed. During the period of time the estate continues to exist, the executor is required to pay necessary expenses relating to administration of the estate from the estates assets.

All income earned by the decedent prior to death is reported on the final Individual 1040 return of the decedent. All income earned by the estate is reported on the estate Fiduciary 1041 return. For the year of death it is therefore necessary to file two short-year tax returns:

  • One for the decedent (Form 1040), and
  • One for the estate (Form 1041).

Each year after the year of death, Form 1041 Fiduciary tax returns are filed for the estate until the estate is closed and all remaining assets of the estate are distributed to beneficiaries, heirs, or charity.
The executor or administrator of an estate is responsible for performing the following duties relating to tax matters of the estate:

1.  Obtaining an employer identification number (EIN)
2.  Filing necessary income and estate-tax returns including:
     a. The estate's income tax return (both federal Form 1041 and state Form 41)
     b. The federal estate tax return (Form 906, if required)
     c. The state estate tax return (if required)
     d. The decedent's final income tax returns (federal Form 1040 and state Form 40).
3.  Assessing the value of estate assets. (Since estate taxes are assessed upon the fair market value of the estate's assets, it may be necessary to hire an appraiser to make a professional valuation of the estate's assets.)

Estate & Gift Tax Returns

Most decedent estates do not need to file Form 706 Estate Tax Return. The Estate Tax (or Death Tax, as it is sometimes called) return must be filed when the fair market value of all property owned by the decedent exceeds the exclusion amount allowed for the year of death.

When due, the Estate tax is levied on the entire taxable estate, not just on the share received by a particular beneficiary. The executor of the estate is responsible for determining the value of estate assets and filing Form 706 if required.

Federal Estate 706 Return

Form 706 must be filed by the executor for the estate of every U.S. citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $5,200,000.  Beginning 2018, the exemption limit is doubled and only estates valued at over $10 million will be required to file.

Oregon Estate Return

Oregon's filing requirements are different from the federal filing requirements. A return is required if the taxable estate is valued at $1,000,000 or more.