Estate Planning - Taxes

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How to Complete Schedule K and L for Estate Form 706

When filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, use Schedule Kto deduct debts that the decedent owed at death and obligations, such as mortgages or liens, which [more…]

Alternate and Special Valuation: Part 3 of Estate Form 706

In Part 3 of Form 706, the estate administrator can choose to make any of four tax elections depending on if these elections apply to the decedent and benefit the estate. The first two elections, [more…]

Calculate Decedent, Estate, or Trust Business Income and Capital Gains and Losses

In order to file Form 1040 or Form 1041, you will need to determine how much business income, if any, the taxpayer (whether trust, estate or decedent) earned, and calculate capital gains and losses. The [more…]

How to Deduct Administration Expenses for a Decedent, Estate, or Trust

When filing Form 1040 or Form 1041 for a decedent, estate, or trust, you must determine how to deduct administration fees. Deductions for attorney, accountant, and preparer fees are limited on Schedule [more…]

Charitable Deductions for a Decedent, Estate, or Trust

An estate administrator can only give money from an estate or trust to charity if the decedent’s will (or the trust instrument) explicitly instructs it. Because this rule is absolute, charitable deductions [more…]

Estate-Related Taxes You Need to Know About

Depending on the value of your estate, you may not have to deal with at least some of the federal taxes, but you or your surviving beneficiaries may have a substantial amount of tax-related paperwork to [more…]

How to Complete Part 6 of Estate Form 706

Part 6 of Form 706 is where you elect Portability of Deceased Spousal Unused Exclusion (DSUE) for the estate. This list details what do for each section of Part 6: [more…]

How to Time Payments In and Out of an Estate

After death, the rules governing receipt of income in an estate and the payment of its expenses loosen up somewhat. It’s not as though the electric company can threaten the decedent with shutting off the [more…]

How to Invest an Estate to Minimize Income Taxes

Not all estate investments are created equal, and certainly not in their treatment by Congress and the Internal Revenue Code (IRC). There are many types of investments, such as wages, rental income, deferred [more…]

Where to Pay State Income Taxes on an Estate

There are state-specific rules regarding where you pay income tax on the income in an estate or trust. The obvious one is that you file, and pay taxes, in the state where the estate or trust is resident [more…]

What You Should Know about the Unearned Income Medicare Contribution (UIMC) Tax to Manage an Estate

Effective January 1, 2013, there is an additional 3.8 percent tax on investment income in estates and trusts, thanks to provisions in the Health Care and Education Reconciliation Act of 2010. Now, to be [more…]

How to Create Nominee Form 1099s for an Estate

Sometimes, even when the trust or estate doesn’t have to file Form 1041, you still receive tax information from other sources. When you won’t be preparing a [more…]

What Taxes Might an Estate Need to Pay?

Because federal and state tax authorities are much more concerned with how much of the decedent’s property they can tax, they allow for a much broader definition of what the decedent owned at the time [more…]

How to File for Tax-Exempt Status for Your Foundation

To get tax-exempt status for your foundation, file Form 1023, Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. [more…]

Estate Tax Closing Letters and Real Estate Releases of Lien

If you filed a Form 706 United States Estate (and Generation-Skipping Transfer) Tax Return, and/or a state estate or inheritance tax return, you need estate [more…]

How to Complete Schedule J for Estate Form 706

All the Form 706 schedules up to Schedule J deal with the decedent’s assets. With Schedule J: Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims [more…]

How to Prepare to File Tax Returns for a Decedent, Estate, or Trust

Thinking about income taxes may not be high on your list of priorities as you begin administering an estate or trust, but it will soon become a main focus of your administration, whether you’re thrilled [more…]

How to Avoid Double-Dipping Deductions for a Decedent, Estate, or Trust

You may have realized that many of the deductions available on the Form 706 look familiar, and you may be wondering if you can have it both ways, deducting them the first time on the [more…]

How to Compute Taxes for a Decedent, Estate, or Trust

No matter which tax return you’re preparing (the decedent’s personal return or one for an estate or trust), you have to calculate the tax after you figure out the income and the deductions. If you’re working [more…]

Form 1041 Questions for a Trust or Estate

If you’re preparing Form 1041, you’re almost done. All that’s left is to answer some questions at the bottom of page 2. Some of these questions are easy and obvious, but questions 3 and 4 concerning foreign [more…]

Schedule K-1 for Estates and Trusts: Deductions and Credits

In addition to allowing you to split each income distribution into all its component parts, Schedule K-1 also gives the estate income beneficiary all the other tax attributes that can pass through the [more…]

How to Divide Income and Deductions between the Decedent and the Estate

Just because an employer, bank, brokerage firm, or other payer continues making payments to the decedent doesn’t necessarily mean that’s whose tax return they should go. As the administrator of the estate [more…]

How to Complete Schedule M for Estate Form 706

If your decedent left a surviving spouse, you may have a whopper of a deduction available to you, which you report on Schedule M: Bequests, etc. to surviving spouse. [more…]

How to Determine Tax Credits for an Estate or Trust

After you put the sum of lines 1a through 1c on Schedule G, line d, you’re ready to see whether you can reduce your tax with tax credits. Tax credits are dollar-for-dollar amounts that you subtract from [more…]

How to Locate a Decedent's Assets through the Mail

As you read the decedent’s mail, you may find references to many assets, including bank accounts (from bank statements), the safe deposit box (from any rental bills), real estate [more…]

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