Deceased Taxpayers – Understanding the General Duties as an Estate Administrator
General Responsibilities of an Estate Administrator
When a person dies a probate proceeding may be opened. Depending on state law, probate will generally open within 30 to 90-days from the date of death.
One of the probate court’s first actions will be to appoint a legal representative for the decedent and his or her estate. The legal representative may be a surviving spouse, other family member, executor named in the decedent’s will or an attorney. We will use the term “estate administrator” to refer to the appointed legal representative. The probate court will issue Letters Testamentary authorizing the estate administrator of the decedent to act on the decedent’s behalf. You will need the Letters Testamentary to handle the decedent’s tax and other matters.
In general, the responsibilities of an estate administrator are to collect all the decedent’s assets, pay creditors and distribute the remaining assets to heirs or other beneficiaries. As an estate administrator your first responsibility is to provide the probate court with an accounting of the decedent’s assets and debts. Some assets may need to be appraised to determine their value. All debts will need to be verified and creditor claims against the estate must be filed. How to verify a federal tax debt is covered in the Getting Information from the IRS page. How to get IRS to file a creditor claim in the probate proceeding is covered on the Getting the IRS to File a Proof of Claim in a Probate Proceeding page.
Tax Responsibilities of an Estate Administrator
A decedent and their estate are separate taxable entities. So if filing requirements are satisfied, an estate administrator may have to file different types of tax returns.
First, an estate administrator may need to file income tax returns for the decedent (Form 1040 series). The decedent’s Form 1040 for the year of death, and for any preceding years for which a return was not filed, are required if the decedent’s income for those years was above the filing requirement. For help, see the Filing the Final Tax Return(s) of a Deceased Taxpayer page.
Second, an estate administrator may need to file income tax returns for the estate (Form 1041). To file this return you will need to get a tax identification number for the estate (called an employer identification number or EIN). An estate is required to file an income tax return if assets of the estate generate more than $600 in annual income. For example, if the decedent had interest, dividend or rental income when alive, then after death that income becomes income of the estate and may trigger the requirement to file an estate income tax return. For help filing an income tax return for the estate see Filing the Estate Income Tax Return (Form 1041) page.
If the estate operates a business after the owner’s death, the estate administrator is required to secure a new employer identification number for the business, report wages or income under the new EIN and pay any taxes that are due. Publication 1635, Understanding Your EIN (PDF) provides information about this requirement.
Some or all of the information you need to file income tax returns for the decedent and their estate may be in the decedent’s personal records. The IRS can help by providing copies of income documents (Forms W-2 or 1099 for example) and copies of filed tax returns or transcripts of tax accounts. If you need these items see the Getting Information from the IRS page.
Third, an estate administrator may need to file an estate tax return (Form 706). Estate tax is a tax on the transfer of assets from the decedent to their heirs and beneficiaries. In general, estate tax only applies to large estates. For help with determining whether an estate tax return is required and how to file it, see the Estate and Gift Taxes page.
Additional information on the duties of an estate administrator is available in IRS Publication 559, Survivors, Executors and Administrators.