When can you mark a return as “Final” during probate? I’m trying to close my Mom’s estate but there seems to be a Catch 22: Can’t close an estate until the final returns are filed, yet can’t file Final Return until the estate has closed.
Maybe I can file the 1041 and AZ returns as “final” under the theory that the estate is not closed but “terminated”? The instructions to 1041 say a return is “final” if the estate is “terminated.” A Treasury Reg cited in another post mentions that an estate is “terminated” when all assets have been distributed except for small amounts left in accounts for contingencies 26 CFR §1.641(b).
So to get this estate closed, maybe I can:
(1) transfer most of the $20,000 to myself as the only heir,
(2) leave a small amount in the account for contingencies and to keep it open for deposit of the upcoming federal tax refund,
(3) deposit the federal refund when it arrives and then transfer remaining balance to myself as the final distribution,
(4) then file a closing statement with the probate court.
Facts: Mom died in April 2025. The estate is in informal probate. I am the executor and only heir. The only property is $20,000 in the estate checking account made up of refunds owed prior to her death that I deposited as they came in. Mom will get a federal income tax refund on her federal 1040 return. All debts have been paid and the estate has been fully administered except for the transfer of the $20,000. There will be no interest nor any other income earned in 2026. The estate had less than $600 income in 2025. So, officially a 1041 is not required. But I’ve also read in this community that the IRS will contact you unless there is a “final” return filed.
Does this seem do-able to get the estate closed?
