How are taxes Handled in Probate?

probate taxes

Taxes are a big part when it comes to an executor or an administrator’s responsibilities. More importantly, they may like the most intimidating part. The good news is that you probably won’t be dealing with any tax issues if you hire an expert to do it for you. However, there are kinds of taxes you need to know during probate.

Personal Income Tax (State and Federal)

Most executors must file a final state and federal income tax returns for the calendar year in which the decedent died. A tax return is a requirement if the decedent received at least a minimum amount of income set by the federal law in his or her last year of life. You will need to use the IRS Form 1040, and this will be due by the 15th of April in the subsequent year of the death of the decedent. If a person died in September, you would want to file a return for the year of death the following April 15.

Estate Income Tax (State and Federal)

If the estate goes through probate and receives a certain amount of income while the probate court is still pending, you will need to file income tax return for the estate itself. The State law requires you to notify the state taxing authority that you’ve begun a probate proceeding, so the state is sure to get paid.

You can use a calendar year or a different fiscal year for the estate’s income tax. 

Federal Estate Tax

Only if the decedent left a large amount of property and cash assets, worth more than $11 million for his or her death in 2021, will you need to file a federal estate tax return. An expert is necessary when it comes to preparing a federal estate tax return. This is due nine months after the death of the decedent. 

State Estate Tax

You will need to file a State estate tax return if a federal estate tax return is necessary or if the state will impose its own estate tax. About half the states impose their own estate taxes. You have to remember that the federal estate tax rates are lower but smaller estates are taxed from time to time. Again, it will be better if you just get an expert when it comes to this.

State Inheritance Tax

Some states impose inheritance taxes. The federal government does not do this; instead, certain beneficiaries must pay taxes based on the value of what they benefited from the decedent. The surviving spouse or their children generally pay lower rates or are exempted from paying taxes. The value of how much they inherit is immaterial. On the other hand, more distant family members are subject to tax.

The executor or the administrator is generally responsible for filing an inheritance tax return, and the executor may not be able to close the probate case without showing all the inheritance taxes have been paid.

Trust Income Tax

If you are a trustee, as well as an executor, you need to file state and federal income tax returns for the trust as well. A return will be required if the trust receives at least a minimum amount of income that is set by the federal or state law. 


In order to make your life easier, it is better to just hire an expert when it comes to filing and paying taxes. This will make you avoid the confusion. The best thing about hiring experts is that when it comes to selling your probate property, they can also suggest a probate real estate agent to help you market and sell your property.

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