Estate & Trust Tax Preparation

The timely filing of estate, gift and fiduciary income tax returns is a crucial step in the estate and gift tax area. 

Estates may be required to file a federal estate tax return. Federal estate tax returns are required if the estate has gross assets exceeding the current estate tax exemption currently set at $5,120,000.  In addition, if the surviving spouse wishes to utilize any remaining tax exemption of the deceased spouse via the new portability rules, then a federal estate tax return must also be filed. 

Estates may also be required to file an inheritance tax return in the state where the decedent died. For example, Pennsylvania requires the filing of an inheritance tax return.  Its rules are different than the federal rules.  For more details about the Pennsylvania Inheritance Tax please go to the article entitled Pennsylvania Inheritance Tax Return: The Basics.

In addition, fiduciary income tax returns are often times required at both the federal and state level.  There are various elections and tax planning associated with the filling of such returns.

Individuals are required to file gift tax returns when present interest gifts are made of over $13,000 per year to one person.  If the gift is not of a present interest then a gift tax return must be filed regardless of the amount of gift.  Often times filing such gift tax returns have strategic implications for the overall estate planning of a family. For a discussion of the federal gift tax rules please go to the hypertext article entitled Gift Tax Rules and Gift Tax Returns. 

Tax returns in connection with an estate or trust or for lifetime gift planning are prepared for the following taxpayers at the federal, state and local levels:

• Estate Tax Returns at the Federal level, Form 706

• Inheritance Tax Returns at the state level.  For example for Pennsylvania, an estate must file the Pennsylvania Inheritance Tax Return,Form REV-1500

• Gift tax returns, Federal Form 709, for lifetime gifts and any state gift tax returns if required. For a discussion of the filing requirements for federal gift tax rules and related tax strategies, please go to the hypertext article entitled Gift Tax Rules and Gift Tax Returns

• Estate fiduciary income tax returns by filing Form 1041 and PA41

• Income tax return for decedent, final lifetime income tax return of decedent.

• Trusts, Fiduciary income tax returns by filing Form 1041, PA41