I prepared Form 1041 for decendent estate who resided in MA, the only income is rental real estate income from CT (Form 1065 K-1) - do I need to file both state income tax returns? File a resident form 2 for MA and a non-resident CT1041 form for CT? How do I present the income? On both tax returns and somehow get a credit on one state for taxes paid in the other state?
Thanks for the help!
You are correct. Since the rental property is located in CT, the income is CT source income which requires that the estate file a CT tax return. If you are the administrator of the estate and also located in MA, then you have to file a MA return. If you are in a different state you need to check the rules for that state. Some states require that you must file a state return if the administrator is located in the state. If you are in MA, you will file a MA resident tax return and a CT non-resident tax return. Both states will tax the income and MA will give you a credit for the tax paid to CT. The credit may be less than the tax paid to CT.
That helps somewhat but now I am a little more confused. I am the administrator and live in AZ. I was under the impression, since we filed for probate in MA and the deceased was a resident of MA, we needed to file MA form 2 (and CT Form 1041). The only probate asset was the partnership interest in a CT LLC that was sold without a gain.
Based on my cursory research on the AZDOR website, there does not appear to be a need to file a fiduciary AZ return as the decedent was neither a resident nor owned any AZ property. Hopefully, I am not missing anything.