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So if the taxes due (mainly for a small business) is more than the estate is worth, then I am held personally liable as the executor? Only way around this is form 5495?
I am mainly worried if I am personally responsible for the small business returns that I filed for him which state that I prepared the documents (with my signature).
It's usually only in the case of negligence in handling the estate properly that an executor ends up being personally responsible.
But once the dust has settled and all the estate's returns are done I would do the 5495,if there are additional taxes due and no estate money to pay them. It's just good risk management.
Pub 559 says that the 5495 is for income, gift and estate taxes ... but in another place it uses the words personally responsible and ANY additional taxes due.
You've done well by doing the returns, there are penalties for NOT reporting any income. But there's no reason not to do the 5495, especially as it relates to the 941s.
Hope this helps
Ok so if I do all that I can to pay the majority of the taxes due, and also file a 5495 once things are winding down, then even though some taxes are still outstanding, they'll be written off?? I was originally going to wait to be made to pay the taxes, but now I'm thinking that trying to pay the known outstanding taxes would be the best route.