My father-in-law's Estate realized $2,800 in income which was distributed to 4 beneficiaries via K-1s and the Federal IRS form 1041 form was recently submitted and Estate closed.
The income distribution from the K-1 for my wife was entered in our 1040 form and shows up on both the federal and NJ taxes as income.
The Estate NJ-1041 instruction form says a NJ-1041 is only required if the gross income for the Estate, before deductions and exemptions, is greater than $10,000. As such, since the Estate only realized $2,800 in total income I wish to confirm there is no need for us to file a NJ-1041 in closing the Estate?
Thanks in advance for any perspectives.
Yes, you should be fine not filing for NJ.
Very sorry for your loss.
No, because the rules are listed in order. If you have less than $10,000 of gross income, you are not required to file. However, if the trust income is over $10K, but one of the subsequent tax exclusions applies, you must file to report the income is not subject to New Jersey tax.
Bottom line: If trust gross income is less than $10,000, no NJ trust return is required.
The 10,000 is prorated, so it would depend on the date of death.
According to the State of New Jersey:
“The fiduciary of every resident estate or trust must file a New Jersey Gross Income Tax Fiduciary Return (Form NJ-1041) if gross income, before exemptions or deductions, was more than $10,000 (prorated for the number of months covered by a part-year return) during the tax year. “
My FIL passed on Thanksgiving 11/25/2021 but no income was generated at all in 2021 and then only $2,800 in 2022. The Estate was closed in 2022. So then if I'm understanding this correctly we should be ok?
Thanks in advance.
Yes, you should be fine not filing for NJ.
Very sorry for your loss.
One last question though.
In reading the NJ-1041 form instructions info outlined below does this mean we still need to file NJ-1041?
The fiduciary of every resident estate or trust must file a New Jersey Gross Income Tax Fiduciary Return (Form
NJ-1041) if gross income, before exemptions or deductions, was more than $10,000 (prorated for the number of months covered by a part-year return) during the tax year.
A resident estate or trust is not subject to New Jersey tax if it:
• Does not have any tangible assets in New Jersey;
• Does not have any income from New Jersey sources; and
• Does not have any trustees or executors in New Jersey.
However, the fiduciary must file Form NJ-1041 for such
estate or trust, enclose a statement certifying that the
estate or trust is not subject to tax, and check the box on line 27.
Confusing as not sure if the initial $10,000 requirement supersedes this or do we still need to file since had some income and executor is in NJ?
deeMatrix
No, because the rules are listed in order. If you have less than $10,000 of gross income, you are not required to file. However, if the trust income is over $10K, but one of the subsequent tax exclusions applies, you must file to report the income is not subject to New Jersey tax.
Bottom line: If trust gross income is less than $10,000, no NJ trust return is required.