Filing estate and trust taxes

It’s not the length of the forms. It’s attention to the critical details.

BPM has a skilled and dedicated team of CPAs and accountants who prepare fiduciary returns for estates and trusts.

We keep abreast of changes in guidance, including in the comprehensive and lengthy guidance of the IRS. Many clients count on us to file various forms on an annual calendar, giving them a simple solution and peace of mind.

Two principal forms should be considered by executors and beneficiaries of estates.

Form 1041: Income tax for estates and trusts

The tax return used to report income, deductions, gains and losses of an estate or trust is the IRS Form 1041. Any such entity with income over $600 in a fiscal year must file for that year.

Ostensibly simple, Form 1041 itself is two pages long. The instructions, however, are twenty times that length. Various considerations come into play, including whether any beneficiaries are non-resident aliens. Income to any beneficiary will be reported, and those beneficiaries receive a K-1.

Form 706: U.S. estate tax returns

The executor of a decedent’s estate uses Form 706 to determine the estate tax imposed by Chapter 11 of the Internal Revenue Code. Form 706 is also used to compute the generation-skipping transfer (GST) tax imposed by Chapter 13 on direct skips.

Completing a 706 may not be legally required, though a surviving spouse may benefit from completing an estate tax return in the future. When you consult with BPM’s trust and estate tax group, a specialist can guide you through the possible benefits and clarify key elements of prevailing guidance — giving you a step-by-step guide to addressing issues involved in closing out an estate.