By
eHow Personal Finance Editor
Difficulty: Moderately Challenging
Things You’ll Need:
- Internet access
- Tax information
Closing an Estate
Step1
File the final 1040 income tax.
Step2
File estate tax if necessary. Pay attention to your loved one’s medical debt, as this can be deducted from the value of the estate for the purposes of taxes due. Also check with the state of residence to see if death taxes are owed.
Step3
File form 1041 if the income of the estate itself generates $600 or more of income before it is closed. You may want to hire a tax professional to ensure you don’t miss anything.
Step4
File form 706 if the value of the estate is $2 million or above. The exact method for calculating this value is available on the IRS Web site.
Step5
If you have to file Form 1041 or Form 706, you will have to fill out Form SS-4 to get an EIN (making the estate an employer) and then file Form 56 to let the IRS know you are handling the tax matters of the estate. This ensures that you get IRS notices directed for the estate.
Step6
Open a checking account in the name of the estate with some funds from the estate itself to deal with expenses like funeral bills as well as taxes and to accept interest from the estate. You will need the EIN on hand for this purpose.
Step7
Distribute the assets of the estate in accordance with the Will once the taxes and debts are settled.
Comments
Rockney said
on 4/20/2008 Thanks for some good informative points!