Estate Tax Returns, Extensions, & Audits

Estates & Taxes: Overview

In addition to the legal and practical issues involved in the administration of a decedent’s estate, a major responsibility of an estate representative (executor or administrator) is satisfying all tax-related obligations. Tax may be due, on both federal and state levels, in connection with: 1) the value of estate assets; 2) income generated by estate assets; and/or 3) income earned by the decedent during life.

It is important that necessary tax returns be properly completed and timely filed. If an executor or administrator neglects to properly file the appropriate returns and such failure causes the estate to be charged penalties and/or interest, he or she may be liable to the estate for costs. Therefore, it is crucial that the estate representative understand all tax-related obligations and potential personal liability for failure to satisfy such obligations. Executors and administrators would be well served to seek the guidance of an experienced estate attorney to ensure that all tax-related obligations are met.

At times, circumstances arise where the timely filing of a tax return is impractical. In these situations, it is important to properly request a filing extension so as to minimize penalties.

Similar to personal income tax returns, estate-related tax returns are subject to audit by the State or IRS. If an estate’s returns are audited, it is extremely important to follow the counsel of an estate attorney who is well versed in the intricacies of estate tax.

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