Deceased parents estate taxes - 2022

[Marytgeb]

My parents died in 2021. My estate lawyer said I didnt need to file estate taxes in 2022 but I'm not sure that's accurate. How do I know?

[Anonymous_]

You should heed your lawyer's advice but there is an estate tax and an estate income tax, which differ.

An estate tax return (Form 706) would only be required if the estate were very large (exceeding $12,920,000).

See https://www.irs.gov/instructions/i706#en_US_202309_publink1000276625

An estate income tax return (Form 1041) would be required to be filed if the estate had gross income of $600 or more.

See https://www.irs.gov/instructions/i1041#en_US_2022_publink1000285942

[Anonymous]

Hi, 

Unfortunately as tax experts at TurboTax, we are not allowed to give tax advice regarding trusts and estates. 

Here is a link to the 2022 Trust/estate tax return product: https://turbotax.intuit.com/small-business-taxes/ 

Here is another article about estate returns: https://ttlc.intuit.com/turbotax-support/en-us/help-article/intuit-product-orders/turbotax-need-file... 

Thank you for your question.

[Marytgeb]

Forgive my ignorance but what is considered income? I inherited some retirements funds, some were transfer on death.  They did receive some refunds from utility payments and such in 2022.

[Anonymous_]

TOD accounts transfer outside the estate and would not be included on an estate income tax return.

Refunds from previous payments for personal services, such as utilities, would also not be included on an estate income tax return.

[audicof]

What are the items that are considered income and reportable on the estate tax return?  How is the home sale treated?  There’s a lot of mention of capital gains but it’s not clear in reference to the estate bs beneficiaries.

[Anonymous_]

Did the estate sell the house? If so, was an EIN applied for and issued to the estate? 

The sale would then be reported on Form 1041 with the basis (most likely) being the fair market value on the date of death which would be subtracted from the sales price (less selling expenses) to arrive at the gain or loss. 

Note that a loss can be recognized and passed through to the beneficiaries (on the final 1041) provided there was no personal use of the house after death.