Handling Taxes After a Death: Alleviating Hassle

Taxes after death do not have to be complicated or stressful. As long as you understand what you are responsible for, the entire process can be hassle free, and you can lay the issue of taxes after death to rest.

Important Points to Know

The first thing you should know is that probate may not be necessary. There is a threshold amount that the Gross Estate must meet, and this varies by state. You will need to check your state regulations for the amount.

Remember that you will not need to worry about taxes immediately after the death of your loved one. You have 9 months after the death to file the estate tax return.

Steps in Filing Estate Taxes

Step 1: You can download the Estate Tax form on the Internal Revenue Service website: www.irs.gov. The form number is 706 and the related Publication is 950. There you will see all of the information that needs to be filled out on the form.

Step 2: You will need to gather copies of the following information:
  • death certificate
  • decendent's will and/or related trusts
  • appraisals
  • litigation documents involving the estate
  • other documentation partially included assets, losses, near date of death transfers, etc.
Make sure that you have all of these documents in order before you begin to fill out Form 706A.

Step 3: If you are certain that you will not be able to submit the document and prepare all of the neccessary in time for the 9 month deadline, you can file for an extension. An extension will grant you an additional 6 months, however the taxes still need to be in by the due date. Any taxes not paid by the due date will accrue interest until it is paid in full.

Step 4: If after viewing the Form 706A, you decide that you need professional assistance, you should consider having someone prepare the return for you. According to the IRS, you should consider the following questions when considering a tax professional to handle your taxes after death.
  1. What is the complexity of the estate? By the time most estates reach $1,000,000, there is usually some complexity involved.
  2. How large is the estate?
  3. Are the descendant's records in good condition?
  4. How many cooperative beneficiaries are there?
  5. Do you need an attorney, CPA, Enrolled Agent (EA) or other professional(s)?
Step 5: Be sure to communicate with several professionals in order to determine the ones who is most qualified to assist you with your particular needs. You may need both and attorney and a CPA or EA. You may also need an appraiser of financial adviser to help you handle probate or the estate taxes.

Step 6: Make sure that you receive your closing letter. This document will prove that all matters concerning taxes after death have been settled with the IRS. It can take up to 6 months for your estate tax return to be processed. If further examination of the estate is needed, the closing letter will arrive later.
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