My mother-in-law passed away in April of 2020. She was living on SS income & had only a small amount of interest income, thus we did not have to file a 1040 for her. The estate had less than $600 of total income (all bank interest income) in 2020 and thus we filed no 1041 for 2020. We are filing a 2021 Estate Tax Return (1041) to show that her home sale in 2021 had no capital gain, thus less than $600 total income in 2021 also. (The estate distribution to 4 beneficiaries is almost exclusively from the home sale proceeds as inheritance.) We are trying to complete all activity in 2021 (including filing the tax return). The 2021 Form 1041 is not out yet, but I found a guide that said we could use the 2020 Form 1040 for a partial year ending in Dec, by using the prior year's (2020) form & marking the period Jan 1 to Dec 5 (or something similar) & changing the YEAR at the top to "2021". Can I do this with the 2020 TurboTax SW too (after printing it out, to mail it in)?
I found two issues using TT 2020 for this:
1. TT Business filled in the 1041 estate beginning date to be the death date in April 2020, and the end date to be Dec 31, 2020. (This is correct, but we did not need to file an estate tax return in 2020.) I propose to input all info as 2021 data & manually change these two dates on the form 1041 after printing it out.
2. TT Business would not let me show the property sale date in 2021, for the 2020 1041 return. (Also OK, but we are using the old form for the 2021 return and need the date to be correct.) For this, I propose to simply enter the date in TT as a 2020 date, then change the year to 2021 manually after printing it out.
Are there any problems with this plan to fully close out the estate & 2021 Form 1041 tax return in 2021?
