Estate Taxes and Closure

[vze56v6x]

I am the executor of my moms estate.

I am the only child and sole beneficiary of her assets.

The only additional beneficiary was my minor son who inherited a specific $ amount. This amount has already been distributed.

When I probated her will I opened :

•  a federal tax id  # 
•  an estate bank account

Since I have no essentially settled everything with the estate (distributed funds to my son and sold my moms house), I now need to close the estate.

Aside from below is there anything else I need to do?

Close Estate Bank Account

Close the federal tax id #

File IRS taxes form 706 (distributing K1 forms to myself and son)

I am in New Jersey and I am not aware that NJ requires anything else to be done.

Does anyone have any insight?

Thanks In Advance

[NCperson]

what about Form 1041?????? that is normally where the K-1's come from

I don't beleive (not 100% certain) that Form 706 is required, unless the estate exceeds $11.7mm.

from the Form 706 instructuons: 

Which Estates Must File
For decedents who died in 2021, Form
706 must be filed by the executor of the
estate of every U.S. citizen or resident:
a. Whose gross estate, plus
adjusted taxable gifts and specific
exemption, is more than
$11,700,000; or
b. Whose executor elects to transfer
the deceased spousal unused
exclusion (DSUE) amount to the
surviving spouse, regardless of the
size of the decedent's gross estate.
See the instructions for Part
6—Portability of Deceased Spousal
Unused Exclusion, later, and
sections 2010(c)(4) and (c)(5)

[rjs]

You need to consult a lawyer who specializes in wills and estates.

Did your mother live in New Jersey? If not, you need a lawyer who practices in the state she lived in.

[Mike9241]

form 706 is not required unless her estate was in excess of $12 million. a  Federal 1041 is required.

the federal ID# is never closed. you just file the 1041 as final. New Jersey does have its version of the 1041

instructions for NJ

https://www.nj.gov/treasury/taxation/pdf/current/1041i.pdf 

estates and trusts can be tricky. federal - if there was income was it distributed in a timely manner so it's the beneficiary that pays the tax. 

[Anonymous_]

I am sorry for your loss.

You might want to consult (at least briefly) with a local attorney (New Jersey licensed) who specializes in probate and estates.

See https://www.avvo.com/probate-lawyer/nj.html

You also might want to consult, in person, with a tax professional.

See https://taxexperts.naea.org/listing/service/estates-gifts-trusts

You definitely do not need to file a Form 706 unless the gross estate gross estate is more than $11,700,000.

See https://www.irs.gov/instructions/i706#en_US_202112_publink1000276625

You also do not need to file a Form 1041 unless the estate had gross income of $600 or more for the tax year.

See https://www.state.nj.us/treasury/taxation/inheritance-estate/inheritance.shtml

[vze56v6x]

Yes New Jersey

a lawyer would be a waste of money

its a standard basic estate nothing fancy

I have  done it all by myself to date 

[vze56v6x]

Ok yes I was actually referring to form 1041 but got confused  with form 706

her estate is probably just shy of the 600 bc everything else was joint accts except her home which was sold. 

wouldn’t I need to do 1041 either way to prepare the schedule K so next year I can declare what I inherited (the proceeds form the sale of the house)? Or what my son inherited?

[vze56v6x]

Yes it was distributed but I don’t think we the beneficiaries have to pay taxes. It’s a daughter and grandchild and from what I read we are exempt from paying taxes. 

[Anonymous_]

With respect to federal income taxes, an inheritance is not taxable (with the exception of retirement accounts).

The estate would be required to file an income tax return (Form 1041) if it receives $600 or more in gross income. Since the sale of the house would certainly exceed that amount, you will have to file a 1041 to report the transaction (sale of the house).

However, there would likely be little or no gain (and, possibly, even a loss after selling expenses) on the sale if it occurred shortly after the death of your mother. In that event, there would be virtually nothing to pass through to you or the other beneficiary on a K-1 (the distribution of corpus (principal) does not have to be reported).

[NCperson]

@vze56v6x - I really think for the 'few dollars' it's going to cost, suggest getting a tax accountant to do this for you.  it's a one time event in your life and as the fiduciary, you don't want to get this wrong.  You are accountable under the law to 'get it right' for the beneficiaries. 

[vze56v6x]

I understand but the beneficiary is me so I am not too worried about getting it wrong for the beneficiaries. 😉

[Anonymous_]

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@vze56v6x wrote:

I understand but the beneficiary is me so I am not too worried about getting it wrong for the beneficiaries. 😉

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Yes, but you did mention other parties (who appear to be related and possibly minors).