Filing for mom and her estate

[Jim-Bob-61]

Mom passed away in late Nov of 2019.  She had been receiving Soc Sec, dad's VA payment and she supplemented income by drawing on an annuity. After she passed, I set up a new Trust Account and had all her assets from Charles Schwab moved into new account. Liquidated the remaining amount in her annuity as well.

Question is (or please confirm), that I am I filing an individual return for mom like I did in the past years for her SS, VA and annuity payments AND also filing a return for the new trust set up? My biggest confusion is reporting the assets from Charles Schwab since end of the year dividends/capital gains were paid in Dec after her death and some were posted to the account prior to me setting up the new trust and some came after. I am assuming that it doesn't matter when they posted because it was all after her passing and all that goes into the new Trust's return. I think I have that right? Thanks for any input.

[Irene2805]

I'm so sorry for your loss!

Yes - for 2019 you file an individual return for your Mom and include all the income she received up to her date of death.  You will be asked for a date of death, but you do not have to include a copy of the death certificate. 

You will also need to complete Form 1310 - Statement of Person Claiming a Refund Due a Deceased Taxpayer.  To access this form in TurboTax,

1. Click the Search icon (magnifying glass) at the top of the screen,
2. Type form 1310. 
3. Click on the hyperlink that appears: Jump to form 1310.

There are several other returns to consider besides the 1040:

Form 706 - United States Estate (and Generation-Skipping Transfer) Tax Return

This return is required if your mom's assets exceed $11,400,000.  If not, don't worry about this one.

Form 1041 - U.S. Income Tax Return for Estates and Trusts for her ESTATE

This return is required if the estate generated more than $600 in annual gross income.  Before filing Form 1041, you will need to obtain a tax ID number for the estate. 

• File a 1041 for the estate if the income exceeds $600.
• Include income received between your mom's date of death and the trust start date.
• Include fees relating to the estate:  executor fees; attorney fees; taxes; probate fees; etc.

Form 1041 -  U.S. Income Tax Return for Estates and Trusts for the TRUST

Again, this return is required if the trust generates more than $600 in annual gross income.  This return includes any income generated by the trust.

For estate and trust returns (1041) you will need TurboTax Business.  You can visit the following link to purchase the program: TurboTax Business.  The business version walks you through an interview similar to the personal (1040) product.

If you have to file a trust and/or estate return, do this before you prepare any of the beneficiaries personal returns (you, for example).  As part of preparing the 1041 returns, TurboTax will prepare K-1 forms for each beneficiary.  The beneficiaries will need to enter the information from the K-1 into their personal 1040 returns.

[Jim-Bob-61]

Thank you Irene for the kind words and response.

Just so I'm clear, I file an Estate Return since there were dividends (and one final monthly annuity payment over $600) between her death and start of new estate.

Then I file a Trust Return to cover the capital gains/dividends and final annuity payout after the start of the new trust. 

Since no money was delivered to the beneficiaries yet (most likely in March), do they still need to hold off filing for 2019 (Form K1) or will that happen for the 2020 return next year. If it still generates a K1 for 2019, I'll let my brother and sisters know to hold off until I complete mom's returns.

Thanks again for the help... much clearer now.

Jim

[Jim-Bob-61]

Sorry, one more question... mom's grandkids did get something from her estate that was paid in 2020. Do I need to list them all (11 total) as well for a K1. It was nothing stated in the trust and they were not listed as beneficiaries but just known to me to divvy up a small stock dad bought years ago for them. Each one received a little over $7k each.

Thanks again...

[Jim-Bob-61]

and I assume I use the new EIN created for the new trust for both the Trust and Estate Return? 

[Irene2805 · Accepted solution]

To answer your questions:

• Your understanding of the Estate and Trust returns is correct

• Even if there weren't any distributions, there still may be some items that are split among the beneficiaries (taxes, contributions, deductions, etc.)  It may not amount to much, but if the beneficiaries are in a hurry to file their own returns, they can always file now and amend, if necessary, later.

• Grandkids - No - you don't have to include them as beneficiaries.  Since the stock distribution was separate, don't include that in the estate.

• Did you apply for the EIN in the estate's name or the trust's?  Since they are separate entities, they should each have their own EINs.

Good luck!

[LeonardS · Accepted solution]

No, you will need a seperate EIN for the Trust and the Estate.