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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6169
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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In Jan. of 2015 by brother who was retired died and I became

Customer Question

In Jan. of 2015 by brother who was retired died and I became the administrator and the sole beneficiary of his estate. I have done my research and I believe I don't need to file an individual return for him because there was no income and the total of his interest income is well below the income requirements to file a return. Also, I don't believe I need to file a return on behalf of the estate because it is well below 5M. There is some $2500 of interest in the name of the estate which is above the IRS's $600 limit. I also received a couple 1099-INT's in just his name. Also, I received a 1099-R which shows over $7000 of taxes withheld on behalf of the estate and in c/o me. What forms do I need to file on his behalf and behalf of the estate--or should I have included all these monies in my own individual return? Also, because it's so late now what extensions do I need to file?
Submitted: 7 months ago.
Category: Tax
Expert:  Stephen G. replied 7 months ago.
I'm sorry to hear of your loss; it's never easy no matter the circumstances.First of all I need to know what state your brother resided in and what state you live in.For federal income tax purposes, you will need to file a Form 1041 for the Estate.For Extension purposes you'll need Form 7004. Since there seems to be adequate withholding, you shouldn't need to pay anything with the extension unless the withholding isn't under the Estate's EIN or Federal ID number (it's only 1 number the references are used interchangeably).If any of these 1099s were issued using your brother's Social Security No. & you don't file a final tax return for him on Form 1040, which would show the income being transferred to the Estate if it was received after his DOD, you'll receive notices from the IRS looking for a return due to the 1099 reporting.Do you have an Fed ID No. for the Estate?You may have to file an amended return for yourself for 2015 in order to avoid paying taxes at the high rates of Estates & Trusts and also depending upon what you have done with the related funds.Has the Probate Process been completed yet?When you refer to something "in the name of the Estate" or "on behalf of the estate"; the key is what ID number they have been reported under.
Expert:  Stephen G. replied 7 months ago.
I'm sure you'll have additional follow-up questions and I'll be happy to answer them here.Steve G.
Customer: replied 7 months ago.
My brother lived in MA and I lived in RI when he died
I have since moved to CA
I have an EIN # ***** to me from the probate court
Probate will be over in May
The 1099's naming the estate as the recipient have the EIN#
There is a couple of 1099's in his name and SS# ***** have paltry amounts
Expert:  Stephen G. replied 7 months ago.
Ok, first of all, In MA, the Estate files a Form 2. Since you are a non-MA resident beneficiary, unless there is MA source business income, the income will be passed through to you and taxed in your state of residence. However a return is required. Here is the rule re Extensions to file for the estate:How Do I Request An Extension?To receive an extension of time to file, you generally must file Form M-8736, and pay the amount of tax you expect to owe on or before the due date for filing your Massachusetts income tax return. The filing and approval of this form will extend the due date for six months. Interest is charged on any tax not paid by the original due date. Note: Your extension will not be valid if you fail to pay 80% of your total tax liability through withholding, estimated tax payments, or with your Massachusetts Form M-8736. Exception to Form M-8736 Filing Requirement. Notwithstanding the above, the Commissioner of Revenue will grant certain fiduciaries an automatic six month extension of time to file a tax return, without the need for an application (Form M-8736) by such taxpayer, provided the taxpayer owes no tax with the return (including cases where the taxpayer is due a refund); (Note, In MA the return or extension, if required, is due on April 19, 2016 since MA & ME celebrate "Patriots Day" on 4/18/16 which is a state holiday.
Expert:  Stephen G. replied 7 months ago.
Even though the income may not be significant, you may want to consider engaging a CA CPA to prepare the required fiduciary returns as well as any amended personal returns of yours that are necessary. Since your brother died in January of 2015, the estate will not be able to use a "fiscal year", which means that whatever income is in the estate would be taxed to you in 2015. You wouldn't want the estate to pay any tax on the fiduciary returns as for federal purposes the rates are much higher.

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