Question on Filing taxes for death and estate

[richlyntek]

My parent died in May 2021. They owned a 2 family home collecting rental income for 1 unit only.

I also created an estate.

(1)

For 2021 taxes, do I file taxes thru May 2021 reporting the death on regular 1040 form and claiming rent for the one apartment and expenses on the home like taxes, utilities etc thru May 2021?

The estate bank account only had $800 in it because that was the ONLY account that was in my parents name only and not a joint account. The checking account I used to pay for things after May 2021 was originally a joint account with my parent and once the estate was opened they simply removed their name from the account.

(2)

What about the rent collected, taxes and utilities paid for the home after May 2021?

I paid for everything out of my personal checking account as I collected the rent and used the rent to pay for everything.

Do I claim these expenses and rent collection as part of the estate even though I collected and paid myself?

(3)

We sold the home in February 2022 and the beneficiary is myself for all assets minus a specific $ amount left to my son (their grandson).

I understand we will need to file Schedule K but is that filed in the 2022 tax year meaning by April 2023? 

(We didn't distribute assets from sale of home or my sons inheritance until Feb 2022 and will conclude by March 2022)

(4)

When do I need to file the estate income tax form 1041 by - latest?  Is it April 2022 or April 2023 considering parent died May 2021 and we just finalized the sale of the home which is the main asset.

I plan to use Turbo Tax for all of above but need when things should be filed so I purchase the correct turbo tax version for the right tax year.

Sorry for the long winded post.

[Anonymous_]

I am sorry for your loss.

You most likely need to file a "regular return" (Form 1040) for the income and expenses through the date(s?) of death in May of 2021.

See https://www.irs.gov/publications/p559#en_US_2021_publink100099499

The rental proceeds after May would be reported on the estate income tax return (Form 1041) and the estate should reimburse you for the expenses you paid out of your own pocket (the estate could then deduct those expenses on its 1041).

If you can wrap up the estate by next month (March), you could conceivably file a fiscal year return for the estate (which could run from the date of death in May of 2021 through April 30, 2022). If you used that tax year, you would have until the 15th day of the 4th month after the close of the tax year to file the 1041 (that would be August 15, 2022). In that event, you would only have to file one return, which would be both an initial and final return (1041).

See https://www.irs.gov/instructions/i1041#en_US_2021_publink1000285977

[vze56v6x]

Does that mean if I use the turbo tax software for 2021 I would just use that to print out and complete the form 1041? Does the software walk you through what to do?

and any inheritance we receive is reported on our personal 2022 taxes thru schedule K?

[Anonymous_]

TurboTax Business is the Intuit consumer-level product that is used to prepare Form 1041.

The program does provide some guidance, but you can get lost (sometimes hopelessly) if the return gets the least bit complicated. Further, there could be local and state tax issues (which the software may not cover).

Therefore, I would highly recommend that you seek guidance from a local tax professional.