Of all the responsibilities an estate executor or administrator has, filing taxes on behalf of the deceased can be one of the most important – and also, one of the most confusing. We’re looking at whether a personal representative must file income taxes for an individual, their estate, or perhaps both?
Federal Income Taxes
If the decedent (the person who passed away) received income over the last year, their executor or administrator would likely have to file a federal tax return on their behalf. If the decedent only received social security or other tax-exempt income, the executor or administrator may not have to file a tax return.
For the federal tax return, the general rule is to file the same form that the decedent filed in previous tax years. If the executor or administrator is unsure if the decedent may owe taxes from prior years, they can file an IRS form 4506-T to request the necessary tax returns and tax account transcriptions. If the executor or administrator believes that the decedent should have received a refund for previous tax years (and didn’t), they can file an IRS Form 1310.
Georgia Income Taxes
For an executor or administrator filing income taxes for a decedent in Georgia, the process is very similar to filing a federal tax return. The personal representative will likely file the same form that the taxpayer did in previous years. If there are questions about unpaid income taxes, the personal representative can contact the Georgia Department of Revenue, a financial expert, or an estate planning attorney for more information.
If the executor or administrator discovers that the decedent received a tax refund check but failed to deposit it before their death, they can request that the refund check be re-issued in the name of the decedent’s estate.
Federal Estate Income Taxes
Estate executors or administrators may also have to file an income tax return for the decedent’s estate. Personal income and estate income are considered separate, taxable entities. (NOTE: estate income tax and estate tax are two different categories. Estate income tax deals with money that the estate earned; estate tax relates to inheritance).
The personal representative is required to file a federal estate income tax if the estate 1) earned more than $600 over the previous tax year, or 2) the beneficiary of the estate is a non-resident alien. Common examples of estate income include real estate profits, interest on estate bank accounts, or salaries that were not paid to the decedent before their death.
Executors or administrators have 12 months from the date of the decedent’s death to file the estate income tax return. They would need to file an IRS Form 1041, indicating that this is for the decedent’s estate and not their own estate. The executor or administrator will also need the estate’s tax identification number (TIN), the estate’s income gains and losses, as well as any deductions. All estates automatically receive a $600 exemption; however, executors or administrators can also deduct distributions to beneficiaries, executor’s fees, experts’ fees, and other expenses relevant to the probate process. If the estate owes any income taxes, the executor or administrator can pay for that using estate assets. The representatives are not personally liable for that amount.
Georgia Estate Income Tax
While the executor or administrator is responsible for filing the decedent’s personal income taxes in Georgia, our state does not impose an additional estate income tax. Personal representatives should check with an estate planning or probate attorney to ensure that they’re meeting all other state requirements related to the probate process.
Have Additional Questions? Contact Our Estate Planning Team
If you have any questions about the responsibilities of estate executors/administrators or filing taxes on behalf of an individual or their estate, please reach out to Brian M. Douglas & Associates. Our team of experienced estate planning and probate attorneys would be happy to help. You can call us at (770) 933-9009 or contact us online.