Properly Filing Tax Returns in Estate Administration

The estate of a deceased person (decedent) becomes a new taxpayer for purposes of state and federal income taxes. The estate must obtain a separate Employer Identification Number (EIN) from the IRS. The new EIN will be used to file the decedent's final tax return, and it must be attached to all accounts in the name of the estate.

The personal representative (PR) of the estate must file all individual tax returns for the decedent along with all tax returns for the estate. It is critical that the PR begins this process early and is mindful of due dates.

• City, Michigan and federal income and intangibles tax returns are due on April 15 in the calendar year following the decedent's death.
• Gift tax returns are due on April 15 in the calendar year following the decedent's death or on the same date of the estate tax return, whichever is earlier.
• Federal estate tax returns (transfer tax returns) are due 9 months after the date of death. A 6-month extension may be requested prior to the due date, but the estimated correct amount of tax must still be paid before the due date.
• Federal generation skipping transfer tax returns are due 9 months after the date of death.

The federal estate tax exclusion amount as of 2016 is $5.45 million, which means that if the combined gross assets and prior taxable gifts do not exceed this amount, the filing of a federal estate tax return is not required.

Deductions allowed from the gross estate to arrive at the value of the taxable estate include mortgages, debts, estate administration expenses, property passing to a surviving spouse and qualified charities. Additionally, the values of farms may be reduced in some cases to qualify for estate tax exemption.

If you are the PR of the estate, filing tax returns and paying taxes in a timely manner is crucial. Failure to do so may subject you to personal liabilities, including interest, penalties and the full amount of tax payments.

Speak With One of Our Attorneys About Your Specific Concerns

At Willis Law, we help people across Western Michigan manage tax obligations during the estate administration process, and our lawyers often act as personal representatives for our clients.

Please call us at (888) 461-7744 or email us to schedule a free initial consultation with one of our lawyers in Kalamazoo, Grand Rapids or Paw Paw. We look forward to speaking with you and helping you meet obligations efficiently.