My father passed away in April 2021, after his 2020 taxes were filed. He had a Trust that became irrevocable upon death. As the successor trustee, I will file his final 1040 in 2022 (for Tax Year 2021), and I plan to use TurboTax Premier to do so. Separately, I've acquired an EIN for the Trust.
His accounts were not complicated. He had checking/savings and CD at a bank; and an investment account with an investment firm. The bank says it does not need the EIN. They simply cut checks to distribute to the beneficiaries, moved the remaining balance to another beneficiary, and then closed his accounts. However, the investment firm needs the EIN to create a new trust account under that EIN. That new account will exist for just a few days until the money is moved to a beneficiary's investment account. It will then be closed and effectively the Trust will have closed close.
Questions:
1) I need to buy TurboTax Business (for the 1041 for the Trust) in addition to TurboTax Premier (for the 1040), correct?
1a) When I use TT Premier I import last year's taxes into the current edition of Premier - but what about the Trust & TT Business? I assume I create the Trust as its own entity using the EIN, and that I would not import anything from Premier into Business.
2) If the bank isn't using the EIN to report to the IRS, do I need to report anything to the IRS (using the 1041) about the bank accounts?
3) Because the investment firm needs the EIN, will the information the firm reports to the IRS be the only information I record on the 1041?
4) Next year, after I file the 2021 taxes, do I contact the IRS to close the EIN?
Thank you for your help with these questions.
I am sorry for your loss.
Frankly, I have to suggest that you consult with legal and tax professionals if you have no experience in matters such as the one presented, particularly if there are other beneficiaries involved.
If you want to try and handle the 1041 yourself, then you need to purchase TurboTax Business, which must be installed and run in a Windows environment. In the process of preparing the 1041, a (presumably final) K-1 will be generated for each beneficiary which will contain each beneficiary's share of income, gain, loss, deductions, credits, et al. Each beneficiary will then enter the information from the K-1 into their individual income tax returns (1040).
You should confirm with the bank that there will be no income (in the form of interest, most likely) that will accrue to the estate. If not, then the bank is simply distributing principal which does not need to be reported to the IRS.
If your father only had two accounts, a bank account and an account at an investment firm, then it is likely you will only have to be concerned with the 1099 (1099-B, most likely) that you receive from the investment firm.
There is no need to "close" the EIN the estate was issued; you will mark the 1041 as "final" after all of the assets have been distributed.