Experience is the Difference®

Your role as an executor or personal administrator of an estate involves a number of responsibilities. Did you know that part of your responsibility involves making sure the necessary tax returns are filed? And there might be more of those than you expect.

Here's an overview:

  • Personal income tax. You may need to file a federal income tax return for the decedent for the prior year as well as the year of death. Both are due by April 15 of the following year, even if the amount of time covered is less than a full year. You can request a six-month extension if you need additional time to gather information.
  • Gift tax. If the individual whose estate you're administering made gifts in excess of the annual exclusion ($14,000 per person for 2017), a gift tax payment may be required. Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is due April 15 of the year following the gift. The filing date can be extended six months.
  • Estate income tax. Income earned after death, such as interest on estate assets, is reported on Form 1041, Income Tax Return for Estates and Trusts. You'll generally need to file if the estate's gross income is $600 or more, or if any beneficiary is a nonresident alien. For estates with a December 31 year-end, Form 1041 is due April 15 of the following year.
  • Estate tax. An estate tax return, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is required when the fair market value of all estate assets exceeds $5,490,000 (in 2017). One thing to watch for: Spouses can transfer unused portions of the $5,490,000 exemption to each other. This is called the "portability" election. To benefit, you will need to file Form 706 when the total value of the estate is lower than the exemption.
  • Form 706 is due nine months after the date of death. You can request a six-month extension of time to file.

Give us a call if you need more information about administering an estate. We're here to help make your task less stressful.

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Tax Planning written in chalk - Due Date ChangesThe Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (2015 Surface Transportation Act) changes the filing deadlines of certain returns. For tax years beginning after December 31, 2015, the due date for a partnership to file Form 1065 is changed to the 15th day of the third month after the close of the tax year (March 15 for a calendar-year partnership). The due date for a C corporation to file Form 1120 is also generally changed to the 15th day of the fourth month following the close of the tax year (April 15 for a calendar-year corporation) (with an exemption for a corporation with a fiscal year ending on June 30).

IMPACT

The shift to a March 15 deadline will better enable partners, like current S corporation shareholders, to receive their Schedules K-1 in time to report that information on their Form 1040 before its April 15 due date. Because individuals and partnerships currently share the same due date, many partners do not have the needed information to complete their return by April 15 and are now forced to file for a six-month extension to file their Form 1040s.

The 2015 Surface Transportation Act also changes the filing deadline for regular C corporations from March 15 (or the 15th day of the 3rd month after the end of its tax year) to April 15 (or the 15th day of the 4th month after the end of its tax year). There is an exception. For C corporations with tax years ending on June 30, the filing deadline will remain at September 15 until tax years beginning after December 31, 2025, when it will become October 15.

In addition to changes in the initial filing due dates, an automatic six-month extension will be available for C corporations, except for calendar-year C corporations which have a five-month automatic extension (until September 15) through 2025. The 2015 Surface Transportation Act also instructs the IRS to modify regulations to provide for a variety of extensions-to-file rules, including, among others, a 6-month extension of Form 1065 to September 15 for calendar-year partnerships; and 5½ months ending September 30 for calendar-year trusts filing Form 1041.

The changes to the filing deadlines are generally applicable to returns for tax years beginning after December 31, 2015. For calendar-year taxpayers, that means the new deadlines will first apply to returns filed in 2017.

Many taxpayers and tax professionals have long advocated for these changes to return due dates. These staggered due dates were recommended not only to enable taxpayers to receive Schedule K-1 information in time to meet their initial filing deadlines. They also help even out the workflow faced by tax preparers both in dealing with initial deadlines and with extensions. Further, the revisions are expected to contribute to a reduction in the need for extended and amended individual income tax returns.

Another welcome change relates to the due date for FinCEN Report 114, Report of Foreign Bank and Financial Accounts. The 2015 Surface Transportation Act aligns the FBAR due date with the due date for individual returns, moving it from June 30 to April 15 and allows for a maximum extension of 6-months ending on October 15.

Of course, we will keep you informed of any impending due dates. In the meantime, if you have any questions, please call our office. We are here to help.

 

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Experience is the Difference®

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