I am executrix of my stepdad's estate. How do I determine whether or not I have to file estate taxes?

[PaulaM]

First determine if you need to file an estate income tax return (Form 1041) or an estate tax return (Form 706).

 An estate income tax return (Form 1041) is filed whenever;

1.) An estate has gross income for the year of $600 or more, or

2.) A beneficiary who is a nonresident alien.

3.) Any taxable income for the year

And estate tax return is filed for estates worth over $5.450 million. Most estates do not have to file an estate tax return (Form 706).

See link below for the differences between the two tax returns.

https://ttlc.intuit.com/questions/4073237-which-turbotax-do-i-need-to-file-a-return-for-an-estate

[ddhawks]

Thank you, Paula.  I definitely don't need to file Form 706.  His home sold for $10,300 more than what he owed on his mortgage, so would that be considered income?  Do I need to claim the $10K on my taxes?

[PaulaM]

If the deed was transferred to you then the sale is recorded on your return in the Investment section. But you receive a stepped up basis so there may be no gain. If the deed was not transferred but simply sold in your stepdad's name, then the proceeds distributed to you, then it is not reported on your tax return.

[ddhawks]

Thank you.  The deed was not transferred to me, and the sale was done using a FEIN instead of his social security number.  Does this change anything?

[PaulaM]

If the home was sold under the estate's FEIN, then the sale is reported on an estate income tax return. The distributed proceeds are not reported on your tax return.

[ddhawks]

Just to make sure I understand: because I used a FEIN, the $10K from the sale of the home needs to be reported on a 1041, correct? It didn't sell for market value, but it did sell for $10K over what he owed on his mortgage.

[PaulaM]

It is reported on the estate return because that is the entity that owned it. The mortgage does not enter into the reporting of the sale of a home at all. You will be entering the Sales Price minus the cost basis of the home = Gain/Loss on sale. You will need TurboTax Business software for the estate tax return or you can use the IRS forms

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i1041.pdf">https://www.irs.gov/pub/irs-pdf/i1041.pdf</a>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f1041.pdf">https://www.irs.gov/pub/irs-pdf/f1041.pdf</a>

<a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/small-business-taxes/">https://turbotax.intuit.com/small-business-taxes/...>