estate tax filing

[tulycat]

I'm filing the first and final return for my mother's estate, but I think I've made a big mistake. She died in 2019, but the estate only closed 2021. When I handled my father's estate years ago, we filed after it was closed, so I was thinking the same way. But now I think I probably should have filed in 2021 (for 2020) as well. Estate had a total of about $8,000 income, all in debt forgiveness granted in 2020. Did I screw up and, if so, how to rectify? Thanks.

[Anonymous_]

Was the estate solvent in 2020?

Regardless, a 1041 should have been filed for that tax year.

At this point, you might want to seek guidance from a local tax professional.

[DianeW777]

Yes, a return must be filed for 2020.  If the estate has income in the amount is more than $600 in any year then an estate return is required to be filed for that tax year. This does not include items in the estate, but income on those items such as interest, dividends, sales of stock and only if this income belonged to the estate and not the beneficiary in those year.

The estate return should have been filed in 2019, 2020 and then finally in 2021, if that income level for the filing requirement was met. 

• Deceased Taxpayers – Filing the Estate Income Tax Return, Form 1041

For each year you were required to file, you should file the tax return.  You can attach a letter explaining why it wasn't filed and ask for any relief of possible penalties for late filing.

If you were not required to file an estate return in prior years because the income was $600 or below then you can file the Form 1041 for 2021 as first and final.

[tulycat]

Thanks very much.