What tax forms do I need to file for a deceased parent's Estate?

My dad passed away in October 2023. I've been going through all the probate paperwork from our lawyer, and there's a section that mentions I need to handle two separate tax filings - one for my dad's final 2023 personal return (which I already completed) and another for the estate itself. We initiated probate in January 2024 and managed to sell his house in March 2024. There weren't any outstanding debts, and his checking account and 401k had beneficiary designations for automatic transfer. I'm confused about what specific tax forms I need to complete for the estate taxes. Can anyone help?

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19 comments

Edwards Hugo

•8M

I'm sorry about your loss. Estate tax filings can definitely be confusing, but I can help clarify what you need. You'll likely need to file Form 1041 (U.S. Income Tax Return for Estates and Trusts) if the estate generated more than $600 in income during the tax year. Since you sold the house in 2024, any capital gains from that sale would be reported on the estate's 1041 for tax year 2024. You may also need to file Schedule K-1 forms to report income distributed to beneficiaries. The estate is considered a separate taxpayer with its own tax ID number (EIN). Did your attorney help you get an EIN for the estate? This is necessary before filing any estate tax returns.

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Edwards Hugo

•8M

The $45,000 gain from selling the house would indeed be reported as income on the estate's Form 1041. Since your father lived in the house, you may qualify for the primary residence exclusion which could exclude up to $250,000 of gain. This would potentially eliminate any tax owed on that gain, but you'd still report it. The estate's tax year can either follow the calendar year or you can choose a fiscal year that starts on the date of death. Many executors find it helpful to choose a fiscal year since it gives more time to deal with estate matters before the first tax return is due. Your return would be due on the 15th day of the 4th month following the close of your chosen tax year.

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Gianna Scott

•8M

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Gianna Scott

•8M

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•8M

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•8M

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•8M

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•8M

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Rhett Bowman

•8M

Don't forget that you'll need Schedule D with the 1041 to report the capital gain from the house sale. Also, if there was any income from the estate during the probate period (like interest earned, dividends, or rental income if the house was rented before selling), that all needs to be reported on the appropriate schedules with the 1041. Another thing to consider - depending on your state, you might need to file a state estate or inheritance tax return. Some states have much lower thresholds than the federal estate tax.

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Rhett Bowman

•8M

Michigan doesn't have a separate estate tax, so you don't need to worry about that. Some states like Massachusetts, Oregon, and Illinois do have their own estate taxes with much lower thresholds than the federal one, but Michigan residents are lucky in that regard. For the $800 in interest from the CD, that would be reported on Schedule B (Interest and Ordinary Dividends) that you'd attach to the 1041. Since the interest income exceeds $600, this confirms that you definitely need to file the 1041 for the estate. You'll report this income and then also show how it was distributed to beneficiaries, if it was distributed during that tax year.

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Chloe Taylor

•2M

I went through this exact situation when my mother passed away last year. Based on what you've described, you'll definitely need to file Form 1041 since the estate had income from the house sale and the CD interest that exceeded $600. A few important points to remember: 1. The house sale will likely qualify for stepped-up basis, meaning the estate's "cost" for tax purposes is the fair market value on the date of your dad's death, not what he originally paid. This could significantly reduce or eliminate the taxable gain. 2. Make sure to get a professional appraisal of the house as of the date of death if you don't already have one - you'll need this to establish the stepped-up basis. 3. The estate's first tax year can end on December 31st of the year of death, or you can choose a fiscal year ending up to 12 months after the date of death. This gives you flexibility on when the first return is due. 4. Don't forget that if you distribute any income to beneficiaries during the tax year, you'll need to prepare Schedule K-1s for them. The good news is that with the stepped-up basis, you may owe very little or no tax on the house sale. I'd recommend consulting with a CPA who has estate experience, especially for the first year - the peace of mind is worth it.

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