Which TurboTax do I need to file a return for an estate?

by TurboTax•226• Updated 2 weeks ago

Which product or service you use will depend on whether you need to file an income tax return for an estate (Form 1041), or an estate tax return (Form 706). TurboTax Desktop for Business handles Form 1041 and will also generate the K-1 schedules and figure out how much net income is allocated to the estate's heirs. However, TurboTax does not currently support the filing of Form 706.

To learn more, refer to IRS Tax Topic 356.

Estate income tax return (Form 1041: U.S. Income Tax Return for Estates and Trusts)

When someone dies, their assets become the property of their estate. Assets such as savings accounts, CDs, stocks, bonds, mutual funds, and rental property may continue to generate income after their owner has passed. This income may require the filing of an estate income tax return (Form 1041) if there is:

Any taxable income during the tax year
Gross income of $600 or more, even if nontaxable
A beneficiary who is a nonresident alien

If Form 1041 is filed, Schedule K-1s should be generated to report this income to the heirs so they can report their share of this income on their own personal tax returns.

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

Estate tax returns are filed for estates worth over $13,610,000 on the date the estate owner died.

The estate's assets and debts at the time of death are declared and tallied. If the estate's value exceeds that amount, estate taxes kick in.

Because of the complexities involved in estate tax returns (including determining what the estate is worth and whether Form 706 needs to be filed) TurboTax does not support it. Preparing an estate tax return on your own is not something you'd want to attempt anyway.

If you need to file an estate tax return, we strongly recommend that you consult with a tax expert, CPA, or tax attorney experienced in both estate planning and taxes.