Understandably I am often asked this question as April 15th approaches. If a decedent’s estate has earned more than $600 in income during the tax year, the executor or administrator needs to file both Federal and New York State fiduciary income tax returns and pay any tax by April 15th. The form for the Federal return is form 1041 and the New York State return is form IT-205. If an estate is open for more than one year, estimated New York State and Federal income tax is due quarterly.
If the decedent died during the tax year, income from the commencement of the tax year until the date of death should be reported on the decedent’s final personal returns with the balance reported on the fiduciary returns.
These filing requirements are also applicable to irrevocable and testamentary trusts. The filing threshold for trusts is $100 in income. The same forms are used for trusts as are used for estates and estimated tax rules also apply.
Decedent’s estates and irrevocable trusts should have Federal ID numbers which should be used on the fiduciary returns.
There are no fiduciary filing requirements for revocable trusts, also known as “living trusts” as income is reported on the grantor/trustee’s personal income tax returns. Once the grantor/trustee dies, the living trust becomes irrevocable and a Federal ID number should be applied for. Any income earned after the death of the grantor/trustee will then be subject to fiduciary income tax and reported on the fiduciary returns.
Failure to timely file and pay fiduciary income taxes can subject an estate or trust to interest and penalties. An experienced attorney can help you comply with the various tax filing requirements.
